CCP Liability Claims Management 2 — Questions and Answers
Question 1: Under the 'occurrence' trigger theory of coverage, when does a general liability policy respond to a claim?
- When the claim is first reported to the insurer
- When the injury or damage actually occurred during the policy period (Correct answer)
- When the lawsuit is filed against the insured
- When the claimant first discovers the injury
Correct answer: When the injury or damage actually occurred during the policy period
The occurrence trigger attaches coverage to the policy in force at the time the bodily injury or property damage actually took place, regardless of when the claim is reported.
Question 2: What is the primary purpose of a 'reservation of rights' letter in liability claims handling?
- To deny the claim outright and close the file
- To notify the insured that the insurer is investigating while reserving the right to deny coverage later (Correct answer)
- To demand that the insured pay their deductible immediately
- To formally accept coverage and begin settlement negotiations
Correct answer: To notify the insured that the insurer is investigating while reserving the right to deny coverage later
A reservation of rights letter allows the insurer to defend the insured while preserving its right to deny coverage if investigation reveals a policy exclusion applies.
Question 3: Which doctrine holds that an employer can be held liable for the negligent acts of an employee committed within the scope of employment?
- Assumption of risk
- Respondeat superior (Correct answer)
- Contributory negligence
- Res ipsa loquitur
Correct answer: Respondeat superior
Respondeat superior ('let the master answer') imputes an employee's negligence to the employer when the act occurs within the scope and course of employment.
Question 4: A claimant suffers a broken leg in a slip-and-fall but had a pre-existing bone disease that made the fracture worse. Which damages rule most benefits the claimant?
- The collateral source rule
- The eggshell skull (thin skull) rule (Correct answer)
- The avoidable consequences doctrine
- Comparative fault apportionment
Correct answer: The eggshell skull (thin skull) rule
The eggshell skull rule requires the tortfeasor to take the victim as found, meaning full liability applies even when a pre-existing condition magnified the harm.
Question 5: In a bodily injury claim, which element of general damages is most difficult to quantify?
- Past medical bills
- Lost wages already incurred
- Pain and suffering (Correct answer)
- Emergency room costs
Correct answer: Pain and suffering
Pain and suffering lacks an objective price tag and must be estimated through jury instructions, per diem arguments, or multiplier methods, making it highly subjective.
Question 6: What does 'subrogation' allow an insurer to do after paying a first-party property damage claim?
- Cancel the insured's policy without notice
- Step into the insured's shoes to recover payment from the at-fault third party (Correct answer)
- Increase the insured's premium retroactively
- Deny future claims from the same insured
Correct answer: Step into the insured's shoes to recover payment from the at-fault third party
Subrogation gives the insurer the legal right to pursue the responsible third party for reimbursement of amounts the insurer paid to its own insured.
Question 7: Which type of liability policy endorsement eliminates coverage for bodily injury or property damage expected or intended from the standpoint of the insured?
- Umbrella follow-form endorsement
- Absolute pollution exclusion
- Expected or intended injury exclusion (Correct answer)
- Cross-liability exclusion
Correct answer: Expected or intended injury exclusion
The expected or intended injury exclusion removes coverage for harm that the insured deliberately caused or knew was substantially certain to result from their actions.
CCP Liability Claims Management 2
Under the 'occurrence' trigger theory of coverage, when does a general liability policy respond to a claim?