Introduction to liability insurance
Liability insurance deal with legal liability that a person may have towards others. One has a legal liability when one becomes liable to compensate others who may be injured, contact sickness or suffer loss or damage of their property as a result of one’s actions or omission.
The purpose of liability insurance is to come to one’s assistance in the event of the above.
No one has any automatic right to obtain compensation for injury or damage. For one to be successful has to prove their claim under a well defined area of liability. An insured may therefore, incur liability arising out of breach of:
- Contract law
- Common law
Statutes may impose duties, the breach of which is actionable. An example is the Work Injury Benefits Act which provides for employer to compensate an employee for the injuries arising out of and in the cause of employment to arrange insurances to make available funds for the compensation.
A contract is an agreement giving rise to obligations which are enforced or recognized by law.
Breach of the obligations under the contract may give rise to a duty to compensate the third party.
This gives rise to several duties under the law of torts and is covered extensively in Legal Aspects of Insurance. A tort is a civil wrong. The law of torts imposes obligations not only to individual but to groups of individuals as well, without requiring their consent. It aims at regulating the conduct of human being with one another in absence of a contractual or other legal relationship. A tort gives rise to an action for unliquidated damages. The most common torts are,
- Strict Liability
- Statutory Liability
In order to succeed in a claim under negligence, one has to prove that;
- The defendant owned them them duty of care
- There has been a breach of duty
- As a result of the breach, the plaintiff suffered injury, loss or damage to their property.
- That the injury or damage complained of was reasonably foreseeable.
In normal circumstances, the onus to proof negligence is on the plaintiff.
Nuisance is the wrong done to a person when they are unlawfully disturbed in the enjoyment of their property or, in some cases, in the exercise of the common right. Nuisance does not depend on fault. The test of reasonableness as to whether a state of affairs has been allowed to develop in the defendant’s land which affects the neighbor as opposed to whether the action complained of was foreseeable as in the case of negligence. Nuisance is governed by the general position that one should use one’s property in away that does not injure their neighbor.
Trespass refers to the unlawful interference with goods, land or the person committed with some force or violence no matter how slight. It is essentially a deliberate and direct interference, as opposed to indirect action as in the case of nuisance. Example throwing objects on other person’s land, straying onto the land of another, either deliberately or accidentally or allowing one’s animals to stray onto the land.
Defamation refers to a tort of publishing a statement that’s force and therefore injures the reputation of another by exposing them to hatred, ridicule and contempt or fear so that their reputation suffer or they are prejudiced in their office, profession or trade. Defamation can either be libel (written and in permanent form) or slander, spoken words and in transitory form.
The general legal position is that if the law does not the defense that the defendant took all reasonable care, then the issue is one of the strict liability. However, this does not mean that there are no defenses allowed. It means that the major defense that that one took all reasonable care is not admissible. it should be noted that, the following defenses can still be raised in action for strict liability.
- Act of God
- Act of third party such as a trespasser
- Negligence of the person claiming
- Consent of the claimant such as in the case of volenti non- fit injuria i.e. the person had voluntarily consented to suffer the risk being complained of.
The tort of strict liability was well demonstrated in the case of Ryland vs Fletcher where it was held that ‘’ an occupier who brings onto and keeps on his land anything which is likely to cause damage if it escapes is under strict obligation to prevent its escape and is liable for the natural and probable consequences caused as a result of its escape. Even though they are not guilty of negligence.
Some Acts of the Parliament imposes duties and liabilities, the breach of which makes one liable to any one injured or one whose property is lost or damaged. Such Acts also severely limits the defense available for liabilities imposed by the Acts. An example is Work Injury Benefit Act which imposes a strict duty on employers to compensate their employees for injuries and diseases arising out of employment.
Vicarious liability is the legal principle that makes one person legally responsible for the actions of others with whom they have close relationship. For example, employers are held liable for the actions of omissions for their employees arising out of or in connection of employment. Principals can or are held liable for actions of their agents which are within the agency contract under the legal principal that if one does a thing through another, they do it themselves.