Author: Chris Boggs
Liability policies respond when an insured is legally required to pay for certain damages or injuries. Look at the following examples from three common liability insuring agreements:
|Policy Form||Liability Insuring Agreement|
|Homeowners' Section II; Coverage Part E:||If a claim is made or a suit is brought against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" to which this coverage applies, we will: 1. Pay up to our limit of liability for the damages for which an "insured" is legally liable.|
|Personal Auto Policy Coverage A:||We will pay damages for "bodily injury" or "property damage" for which any "insured" becomes legally responsible because of an auto accident.|
|Commercial General Liability Coverage Part A||We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies.|
Notice that each of these policy forms apply different terms to express legal responsibility, but all three revolve around the same concept – legal liability. Two questions are answered in this short whitepaper:
- What is "legal liability;" and
- What is required to be held "legally liable"?
What is Legal Liability
Legal liability is liability imposed by the courts on the person or entity responsible for the injury or damage suffered by another party or individual. Such legal obligations (or liability) can arise from intentional acts, unintentional acts or contracts (express or implied) and generally deals with civil wrongs rather than criminal wrongs.
Do not confuse legal liability with negligence. Legal liability and negligence are not synonymous; a person can be negligent (or guilty of negligent conduct) without being legally liable, but that person cannot be legally liable unless first directly guilty of negligence or vicariously responsible for the negligent actions of another person.
What is Required to be Found "Legally Liable"?
"Legal liability" exists when:
- The wrongdoer is found guilty of "Negligent Conduct;"
- The injured party suffers actual damages; and
- The wrongdoer's "Negligent conduct" is the proximate cause of the injury or damage.
Negligence and "negligent conduct" are somewhat synonymous. Negligent conduct is created by the failure of the person to act or behave in the manner that a reasonably prudent person would act in the same situation. To be guilty of negligence or negligent conduct, there must be:
- A duty to act or not act in a certain way; and
- A breach of that duty.
"Negligent Conduct," as the first test towards proving "legal liability," revolves around duty. If there is no duty, then cannot be negligence; if the conduct is not negligent, there can be no legal liability. Six tests applied by the courts aide in deciding if a duty is owed (based on all the facts, the answer to just one question):
- Was the harm foreseeable? The more foreseeable the harm, the greater the duty owed;
- What was the degree of certainty the harm would result? The greater the certainty that harm would result, the greater the duty owed;
- What was the proximity between the conduct and the resulting harm? This is a function of geography, elapsed time and cause and effect. Was the action in close proximity to the injury, within a reasonable time of the action, and is there a reasonable cause and effect relationship? Basically, setting off an explosive next to a house and it catching fire immediately is reasonable proximity. However, setting off an explosive 10 miles outside of town and a building catching fire three days later is outside of reasonable proximity;
- Is there a need to deter this type of conduct in the future? If the action is one that could be detrimental to the public if others engaged in it, there is a duty owed;
- Is there a burden placed on the community as a whole if liability is imposed on those who engage in this type of conduct? Is it reasonable or unreasonable to hold everyone to a certain standard? If reasonable, there is a duty owed; if unreasonable, no (or a limited) duty is owed; and
- How easy is it to avoid this type of conduct? The easier it is to avoid the action, the more likely a duty is owed.
Once a duty is established, the injured party must prove that a breach of that duty occurred. Without a breach of duty owed, there is no negligent conduct and ultimately no legal liability. Whether or not a duty is breached is a function of the degree of care owed to the injured party by the wrongdoer.
The degree of care owed to an injured party is based on the relationship between the wrongdoer and the victim. The greater the degree of care required or expected, the lower the threshold for breaching a duty owed (it is easier to breach a duty when greater care is required). The four degree of care "levels" based on relationships are:
- Slight Negligence: A high degree of care is required;
- Ordinary Negligence: Requires "reasonable" care such as would be provided by a reasonable and prudent person;
- Gross Negligence: Very little care beyond slight care (not to be confused with slight negligence) is required; and
- Negligence per se: A breach of duty because the law says it is. Negligence per se requires: 1) the at-fault party to violate the law, 2) the law to pertain to public safety, 3) the violation of the law be the cause of the injury, and 4) the injured person be a part of the class of persons the law was designed to protect.
Damages are Suffered
Once negligent conduct (negligence) is proven, the second requirement towards proving legal liability is showing that the injured party suffered actual monetary damages. Monetary damages are divided into two broad categories: 1) compensatory damages and 2) punitive damages. Compensatory damages are further sub-classed as either special damages or general damages.
- Compensatory Damages are so named because the intended purpose is to compensate those who have been injured. A more legally precise definition of compensatory damages is: Payment for actual injury or other economic loss intended to compensate the victim. Readily measurable damages, known as special damages, and difficult-to-measure damages, known as general damages, are included in compensatory damages.
- Special damages are easily measured and include medical bills, lost wages, the value of damaged property (real and personal), and additional expenses incurred by the harmed party.
- General damages are somewhat difficult to measure and include such "costs" as pain and suffering, mental anguish, and loss of consortium.
- Punitive Damages are meant to punish the wrongdoer whose actions were egregious, willful, wanton, or malicious. One goal of punitive damages is to deter others from committing the same wrongful acts.
"Negligent Conduct" is the Proximate Cause of the Injury or Damage
Once negligence and actual monetary damages are proved, the last step towards establishing legal liability is determining that the act is the actual cause of the harm. Several legal theories combine to judge causation and establish legal liability: 1) cause in fact, 2) proximate or legal cause, and 3) intervening acts and superseding events.
- Cause in Fact: The basic premise of cause in fact is: without the actions of the supposed at-fault party there would be no injury or damage. To qualify as the cause in fact there must be a reasonable relationship between the breach of duty and the injury. In essence, the act or omission must precede the injury or damage; and there must be an unbroken chain of events between the act/omission and the injury. Once cause in fact is established, the injured party must prove that this initial act is proximately close enough to the injury to qualify as the legal cause of the harm.
- Proximate or Legal Cause is the legal theory used to limit the scope of cause in fact. Proximate cause applies when there is no question that the injury or damage would not have occurred but for the actions or inactions of the wrongdoer. But a question exists regarding whether the resulting harm is proximately close enough to the initial event in geography and time such that any punishment or consequences laid upon or charged to the at-fault party are fair and just. For the cause in fact to qualify as the proximate or legal cause, there must be foreseeability and reasonable proximity.
- Intervening Acts and Superseding Events relate directly to the determination of the cause in fact and proximate cause. An intervening act is one that is or should be reasonably foreseeable and thus does NOT relieve the original wrongdoer of his liability for the injury. In fact, the intervening act is often considered part of the chain of events leading to injury or damage. Conversely, a superseding event breaks the chain of causation or is not reasonably foreseeable, and is, itself, able to cause the resulting injury. Superseding events relieve the original wrongdoer of liability for any injury or damage following such an event.
If the act is shown to be the cause-in-fact and the proximate cause of the injury or damage because there was no superseding event, all three requirements of legal liability are met:
- The wrongdoer was guilty of negligent conduct;
- The victim suffered actual monetary damages; and
- The wrongdoer's negligent conduct was the proximate (legal) cause of the injury or damage.
Disclaimer: This is not to be construed or applied as legal advice. This is but a brief explanation of legal liability and how a "person" (natural or legal) becomes legally liable for injury or damage.
Last Updated: May 12, 2017