Casualty Insurance — Liability, Auto Coverage, and Workers' Compensation

LIABILITY INSURANCE covers the insured's LEGAL RESPONSIBILITY for harm they cause to OTHERS (third parties). It covers: BODILY INJURY and PROPERTY DAMAGE to third parties; the cost of legal DEFENSE (the insurer's duty to defend); and DAMAGES the insured is legally obligated to pay (up to policy limits). It does NOT cover the insured's own property or injuries (those are first-party coverages). THIRD-PARTY coverage: Liability protects against claims by others; the injured third party is not a party to the policy but benefits from it. DUTY TO DEFEND: Usually broader than the duty to indemnify — the insurer must defend even groundless suits within coverage. Casualty insurance centers on liability — the legal obligation to pay for harm to others; understanding what liability coverage includes (third-party injury/damage, defense, damages) is fundamental casualty insurance knowledge.

UNINSURED/UNDERINSURED MOTORIST (UM/UIM) COVERAGE: Protects the INSURED when injured by an at-fault driver who: has NO insurance (UNINSURED motorist — UM); or has INSUFFICIENT insurance to cover the full loss (UNDERINSURED motorist — UIM). COVERS: The insured's (and passengers') bodily injury, and in some states property damage (UMPD); steps in where the at-fault party can't pay; FIRST-PARTY coverage (the insured's own policy pays); WHY IMPORTANT: Many drivers are uninsured or carry only minimum limits; UM/UIM ensures the insured isn't left uncompensated by an at-fault driver who can't pay; SOME STATES require it or require it be offered; PART OF auto policy structure (along with liability, collision, comprehensive, medical payments/PIP); UM/UIM is a key personal auto coverage on the casualty exam — it protects the insured against the gap created by at-fault drivers with no or inadequate insurance.

EXCLUSIVE REMEDY DOCTRINE: The foundational trade-off of workers' compensation. EMPLOYEES receive: GUARANTEED, NO-FAULT benefits (medical care, wage replacement, disability) for work-related injuries — without proving employer negligence; EMPLOYERS receive: PROTECTION from most lawsuits — workers' comp is the employee's EXCLUSIVE REMEDY, so the employee generally CANNOT sue the employer in tort for the injury; THE GRAND BARGAIN: Employees give up the right to sue (and potential large jury awards) in exchange for certain, prompt benefits regardless of fault; employers accept guaranteed liability in exchange for protection from unpredictable lawsuits; EXCEPTIONS (where employees CAN sue): intentional employer acts; injury by a third party (can sue the third party); employer lacking required coverage; NO-FAULT: Benefits paid regardless of who was at fault (with limited exceptions like intoxication); the exclusive remedy doctrine is central to workers' compensation (a casualty line) and a key exam concept — guaranteed benefits in exchange for giving up the right to sue the employer.

100/300/100 means: $100,000 per person BI / $300,000 per occurrence BI / $100,000 PD. Medical $75,000 < $100,000 per-person limit — paid in full. Property damage $12,000 < $100,000 PD limit — paid in full. Total paid: $87,000. Note: if medical bills were $150,000, the per-person limit would cap payment at $100,000.

Exclusive remedy is the fundamental trade-off of the workers' compensation system: employees get guaranteed benefits (medical care, wage replacement) without needing to prove employer negligence; in exchange, they give up the right to sue the employer in civil court for the same injury. Limited exceptions exist (intentional harm, dual capacity doctrine in some states). The employer benefits from predictable costs; the employee benefits from guaranteed compensation.

Umbrella coverage activates when: (1) the underlying policy's limit has been fully paid out (the underlying limit is 'exhausted'); AND (2) the claim is within the scope of the umbrella policy's coverage. The umbrella then pays excess amounts up to its own limit. If the underlying policy doesn't cover the claim at all (e.g., business liability on a personal umbrella), the umbrella may still respond depending on its 'drop-down' provisions. Maintaining required underlying limits is essential — if underlying limits are below the umbrella's requirement, a gap can exist.

OCCURRENCE vs CLAIMS-MADE liability policies: OCCURRENCE POLICY: Covers claims arising from incidents that OCCURRED during the policy period — REGARDLESS of when the claim is filed (even years later, after the policy ended); the trigger is when the incident happened; CLAIMS-MADE POLICY: Covers claims that are FIRST MADE (reported) during the policy period; often requires the incident to have occurred after a RETROACTIVE DATE; the trigger is when the claim is made; TAIL COVERAGE (Extended Reporting Period): With claims-made policies, 'tail' coverage can be purchased to cover claims made AFTER the policy ends for incidents during the policy period; RELEVANCE: Common in professional liability, general liability, medical malpractice; the distinction matters for when coverage applies and for continuity when changing policies; occurrence policies provide longer 'reach' for old incidents; claims-made require attention to retroactive dates and tail coverage; understanding occurrence vs claims-made triggers is important casualty/liability exam content.

This is a collision claim. COLLISION covers damage from impact with another vehicle or object — hitting the guardrail is a collision. COMPREHENSIVE covers damage from a deer STRIKE (the vehicle hits the deer). Swerving to AVOID the deer and hitting something else = collision. This is a classic and frequently tested distinction: deer contact = comprehensive; everything else that results from avoiding the deer (guardrail, ditch, rollover) = collision.

Workers' compensation medical benefits cover ALL reasonable and necessary medical treatment for the work-related injury — with no deductible, copay, or out-of-pocket from the employee. This includes: emergency care, hospitalisation, surgery, physical therapy, prescription medications, and ongoing care for chronic conditions from the injury. The employer (through their workers' comp carrier) pays the medical providers directly in most states. This is one of the key advantages of workers' comp over health insurance for work injuries.

Negligence per se applies when a defendant violated a statute designed to protect the public from the type of harm that occurred. In these cases, the violation itself establishes the negligence element — the plaintiff doesn't need to separately argue what a 'reasonable person' would have done. Example: a driver who ran a red light (violating a traffic statute) and hit a pedestrian is negligent per se — the statute violation establishes negligence. The plaintiff still needs to prove causation and damages.