1 / 30

Property Risk, Liability Risk, Tort System, and Workers’ Compensation

Property Risk, Liability Risk, Tort System, and Workers’ Compensation. Vickie Bajtelsmit , J.D., Ph.D. Colorado State University. Outline. Property Risk Liability Risk The Tort System Workers’ Compensation. Property risk.

emily
Download Presentation

Property Risk, Liability Risk, Tort System, and Workers’ Compensation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Property Risk, Liability Risk, Tort System, and Workers’ Compensation Vickie Bajtelsmit, J.D., Ph.D. Colorado State University

  2. Outline • Property Risk • Liability Risk • The Tort System • Workers’ Compensation

  3. Property risk • Definition: The risk of theft, loss, or damage to your real or personal property. • Direct versus indirect losses • Examples: • Home burns down • Automobile is damaged is accident • Personal property is stolen from your home

  4. Major Property Insurance Policies • Homeowners’ • Auto Comprehensive • Building and personal property • Business income • Boiler and machinery • Inland marine • Ocean marine • Crime (Employee dishonesty) • Difference in conditions

  5. Homeowners’ Insurance • Standardized and simplified policies • Risk classification and underwriting based on • Location • Construction • Fire protection • Building code adequacy and enforcement • Age • Credit score

  6. Homeowner’s Coverages

  7. Valuation of recoverable loss • Actual cash value versus replacement cost • Coinsurance clause • Deductibles • Limits and exclusions • Subrogation

  8. Current Issues in Property Insurance: Catastrophes! • Earthquake, hurricane, flood, wildfire • Do these risks fit the requirements for insurable risks? • Government insurance available (e.g. National Flood Insurance Program) but many do not buy. • Losses have increased over time due to concentration of population in high risk areas.

  9. Liability Risk • Definition: Risk that you will be responsible for an injury to another person or their property. • Legal Basis (1) The Law of Negligence • Breach of duty to another • Causation of Loss • Legal Basis (2) Strict Liability • Causation of Loss

  10. Types of Liability Exposures • Professional liability • Contractors liability • Employer liability • Product liability • Principal-agent liability • Auto liability • Landlord-tenant liability • Contractual liability

  11. Liability Insurance Policies • Homeowners’ • Personal Auto • Commercial Auto • Commercial General Liability (CGL) • Umbrella Liability (business or personal) • Directors and Officers (D&O) • Environmental Impairment Liability (EIL) • Employment Practices Liability • Professional Liability (malpractice) • Errors and omissions (E&O)

  12. Important Concepts in Liability Insurance • Policy Trigger • Accident • Occurrence vs. Claims Made • Policy Limits • Defense Costs • Underwriting Factors • Moral Hazard • Adverse Selection

  13. Types of Damages • Compensatory Damages • Medical costs • Lost wages • Pain and suffering • Punitive Damages

  14. Auto Insurance Coverages • Liability • Medical payments • Uninsured/underinsured motorist • Personal injury protection (PIP) • Physical damage coverage

  15. Minimum Auto Liability Coverage Differs by State: Low Relative to Potential Losses

  16. Auto Insurance Rating • Factors in claim costs by jurisdiction • Accident rate, Small cars, Urbanization, Medical costs, Auto repair costs, Fraud, Litigiousness • By person • Driving record, Age, Miles driven, Credit score, Type of vehicle, Marital status, Gender, Territory

  17. Auto No Fault Laws • Pure versus modified • Verbal thresholds • Dollar thresholds • Add-on laws • Choice systems • Evidence on cost savings • Number of No Fault States Declining

  18. Issues related to the Legal System • Increased Litigation • Class Actions • Insurer bad faith claims • “New risks” • Escalating jury awards • Non-economic and punitive damages • Insurance fraud

  19. Evaluating the Legal System • Objectives • Compensation of victims • Improved safety • Deterrence • Are these accomplished? • At what cost? • Are the outcomes equitable?

  20. Cost of the U.S. Tort System

  21. Inefficiency of the System: Less than Half the Tort Dollar Goes to Claimants Source: Tillinghast-Towers Perrin

  22. Factors Driving Tort Costs • Innovative Plaintiff’s Attorneys • Generous Juries and Punitive Damages • More Class Action Law Suits (Product Liability, Discrimination, Shareholder) • Medical Cost Inflation • Media Coverage • Weak Economy • First Party Bad Faith Claims

  23. Tort Reform Developments • Medical Malpractice Caps on Noneconomic Damages • Caps on Punitive Damages—What’s Reasonable? • Class Action Reform • Arbitration

  24. Tort Reform Proposals • Caps on punitive damages • Caps on pain and suffering damages • Attorney fee limits • Arbitration • Limits on class actions • Modifications to Collateral Source Rule • Modifications to Joint & Several Liability

  25. Workers’ Compensation

  26. Workers CompensationBackground • Historically, injured workers had to rely on the law of negligence • Employers were rarely held responsible • Proof of negligence difficult • Defenses available • Currently: No fault (strict liability) system • Wage replacement • Medical benefits • Employer strictly liable for injuries arising out of and in the course of employment • Workers give up the right to bring suit

  27. Problems in Workers Comp • Variation across states • Benefits and utilization • Financing of the system • Litigation (above threshold) • Fraud (by workers,employers,doctors, lawyers, insurers) • Medical Cost Inflation • Cost of dispute resolution

  28. Other Current Issues • Increasing occurrence modern risks such as repetitive motion, mental stress, obesity • Reintegration of veterans • ADA (Americans with Disabilities Act): Must accommodate employees with disabilities • Managed Care • 24 hour coverage

  29. Workers’ Comp Summary • Workers’ compensation programs provide a valuable type of insurance for injured workers. • The original trade-off of employer strict liability in return for employees giving up the right to sue is often eroded. • Costs are rising but are a decreasing % of total employee compensation. • Smaller firms feel the cost the most.

More Related