Principles of Risk Management and Insurance - Chapter 19

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The Liability Risk
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1

Which of the following statements about torts is (are) true?

  1. The person who is injured or harmed by a tort is called a plaintiff or claimant.
  2. The punishment for committing a tort is damages in the form of money.
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: C

2

Which of the following is an intentional tort?

  1. A) slander
  2. B) negligence
  3. C) strict liability
  4. D) murder

Answer: A

3

A situation in which a person is held legally liable even though fault or negligence cannot be proven is an example of

  1. A) general damages.
  2. B) comparative negligence.
  3. C) an intentional tort.
  4. D) strict liability.

Answer: D

4

Failure to exercise the degree of care required by law to protect others from harm is called

  1. A) premeditated liability.
  2. B) vicarious liability.
  3. C) punitive damages.
  4. D) negligence.

Answer: D

5

All of the following are elements of negligence EXCEPT

  1. A) the ability to pay damages.
  2. B) the failure to perform a legal duty to use reasonable care.
  3. C) damage or injury to a claimant.
  4. D) proximate cause between the negligent act and the injury or harm that occurs.

Answer: A

6

Which of the following statements about the elements of negligence is (are) true?

  1. The negligence of the tortfeasor may arise from a failure to act.
  2. The damage that results must be in the form of property damage.
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: A

7

Damages awarded for losses that can be determined or measured are

  1. A) special damages.
  2. B) general damages.
  3. C) punitive damages.
  4. D) comparative damages.

Answer: A

8

Which of the following statements about monetary damages awarded by a court is (are) true?

  1. The purpose of general damages is to provide benefits for medical expenses or loss of earnings.
  2. The purpose of punitive damages is to punish the tortfeasor so that others are deterred from committing the same wrongful act.
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: B

9

Heather sued Robert for injuries suffered in an automobile accident. Based on the facts presented, the jury concluded that Heather was 40 percent at fault in the accident and Robert was 60 percent at fault. Under the common law doctrine of contributory negligence, the jury should award Heather

  1. A) nothing.
  2. B) 40 percent of her actual damages.
  3. C) 60 percent of her actual damages.
  4. D) 100 percent of her actual damages.

Answer: A

10

Which of the following statements about comparative negligence laws is (are) true?

  1. Under the pure rule, any negligence by the plaintiff automatically bars recovery for damages.
  2. Under the 50 percent rule, parties who are equally at fault are each allowed to recover damages.
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: B

11

Nancy was injured when she drove her car through a stop sign and was struck by Philip's car. Philip saw Nancy and could have stopped. However, he failed to do so since he had the right-of-way. Nancy can recover damages from Philip under which of the following legal doctrines?

  1. A) vicarious liability
  2. B) the last clear chance rule
  3. C) contributory negligence
  4. D) the assumption of risk doctrine

Answer: B

12

A common situation involving strict liability includes which of the following?

  1. A) operating a motor vehicle
  2. B) blasting operations
  3. C) manufacturing a product
  4. D) mining operations

Answer: B

13

Which of the following may give rise to imputed negligence?

  1. A) employer-employee relationships
  2. B) injury to a trespasser
  3. C) sole proprietorships
  4. D) attractive nuisance situations

Answer: A

14

All of the following requirements must be met to satisfy the doctrine of res ipsa loquitur EXCEPT

  1. A) The injured party has not contributed to the accident in any way.
  2. B) The injured party must prove negligence on the part of the defendant.
  3. C) The event is one that normally does not occur in the absence of negligence.
  4. D) The defendant has exclusive control over the instrumentality causing the accident.

Answer: B

15

Under certain conditions, the wrongful acts of one person can be attributed to another person. This practice is called

  1. A) imputed negligence.
  2. B) mediation.
  3. C) comparative negligence.
  4. D) strict liability.

Answer: A

16

Which of the following statements about the legal obligations of a property owner is (are) true?

  1. A property owner must inspect the premises for the benefit of an invitee and correct any unsafe conditions.
  2. A property owner has the right to set a trap designed to injure a trespasser.
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: A

17

Under common law, which of the following persons is most likely to be classified as an invitee?

  1. A) a mail carrier
  2. B) a social guest
  3. C) a door-to-door salesperson
  4. D) a solicitor for a charitable organization

Answer: A

18

Which of the following are legal obligations of a property owner with respect to an invitee?

  1. The property owner must warn an invitee of any unsafe conditions.
  2. The property owner must inspect the premises and eliminate any dangerous conditions revealed by the inspection.
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: C

19

What is the intent of the family purpose doctrine?

  1. A) to impose liability on children for the care of elderly parents
  2. B) to impose liability on the owner of an automobile for the negligence of immediate family members operating the automobile
  3. C) to impose liability on a parent for any negligence caused by a child
  4. D) to impose strict liability on the owner of a wild animal for any injuries caused by the animal

Answer: B

20

Which of the following statements about the immunity of governmental entities is (are) true?

  1. Governmental entities are more likely to be immune from liability when performing proprietary functions than when performing governmental functions.
  2. Many courts have eliminated the immunity of government entities.
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: B

21

The doctrine of respondeat superior applies to a(n)

  1. A) parent's liability for a negligent child.
  2. B) pet owner's liability for the pet.
  3. C) employer's liability for a negligent employee.
  4. D) manufacturer's liability for a faulty product.

Answer: C

22

Situations under which parents can be held liable for the actions of a child include which of the following?

  1. The child uses a parent's gun to injure someone.
  2. The child is acting as an agent of the parent.
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: C

23

Under one doctrine, a person who understands the danger inherent in an activity cannot recover damages in the event of injury from the activity. This doctrine is called the

  1. A) contributory negligence doctrine.
  2. B) assumption of risk doctrine.
  3. C) comparative negligence doctrine.
  4. D) fellow servant doctrine.

Answer: B

24

One tort reform permits manufacturers to assert that as long as the product conformed to the prevailing technology and production methods at the time it was produced, it cannot be considered a defective product today. This defense is called the

  1. A) collateral source rule.
  2. B) state of the art defense.
  3. C) strict liability defense.
  4. D) privity of contract rule.

Answer: B

25

Traditionally, federal state, and local governments could not be sued. This immunity had eroded over time. Today, government units may be liable for injuries arising out of money-making activities. Such activities are called

  1. A) municipal operations.
  2. B) proprietary functions.
  3. C) commercial ventures.
  4. D) pecuniary interest.

Answer: B

26

All of the following are proposed solutions to the medical malpractice problem EXCEPT

  1. A) shortening the statute of limitations for filing lawsuits.
  2. B) eliminating arbitration panels to resolve disputes.
  3. C) placing limitations on contingent fees charged by attorneys.
  4. D) placing limitations on damage awards.

Answer: B

27

A homeowner was repairing the deck on the back of his home. He left power tools on the deck when he quit working for the day. A neighbor’s child saw the power tools. He came on to the deck, and started to play with a power saw. He cut off two of his fingers. A property owner may be held liable for creating a condition that entices children to enter the property where they are injured under the doctrine of

  1. A) sovereign immunity.
  2. B) attractive nuisance.
  3. C) family purpose.
  4. D) respondeat superior.

Answer: B

28

Arguments in favor of reforming the civil justice system include which of the following?

  1. There is often a long delay in settling lawsuits.
  2. Compensation awards have decreased significantly over the past two decades.
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: A

29

All of the following are examples of tort reform proposals EXCEPT

  1. A) modifying the collateral source rule.
  2. B) eliminating caps on noneconomic damages.
  3. C) regulation of attorney fees.
  4. D) imposing penalties to deter frivolous lawsuits.

Answer: B

30

A defendant who is only slightly liable may be required to pay the full amount of damages under which of the following?

  1. A) the joint and several liability rule
  2. B) the collateral source rule
  3. C) arbitration
  4. D) res ipsa loquitor

Answer: A

31

Alternative techniques for resolving legal disputes without litigation include which of the following?

  1. Arbitration
  2. Mediation
  3. A) I only
  4. B) II only
  5. C) both I and II
  6. D) neither I nor II

Answer: C

32

All of the following are categories of torts EXCEPT

  1. A) intentional torts.
  2. B) breach of contract.
  3. C) strict liability.
  4. D) negligence.

Answer: B

33

James was injured in an auto accident caused by another motorist's negligence. To reimburse him for his hospital bills and lost earnings, items which can be specifically itemized, James will receive

  1. A) punitive damages.
  2. B) special damages.
  3. C) imputed damages.
  4. D) general damages.

Answer: B

34

James was injured in an auto accident caused by another motorist's negligence. He received severe facial lacerations and injured his back in the accident. In payment for his pain, suffering, and disfigurement, losses which cannot be specifically itemized, James will receive

  1. A) punitive damages.
  2. B) special damages.
  3. C) imputed damages.
  4. D) general damages.

Answer: D

35

Michelle had major abdominal surgery. Months after the surgery, she still did not feel well. When she was operated on again, the surgeon discovered two sponges that were not removed at the conclusion of the first operation. Michelle should be able to collect damages without having to prove negligence under the doctrine of

  1. A) joint and several liability.
  2. B) res ipsa loquitor.
  3. C) contributory negligence.
  4. D) uberrimae fidei.

Answer: B

36

Francis opened a store. She knows that customers who come to the store may be injured on the premises and hold her responsible for their injuries. Under common law, business customers in the store Francis opened are considered

  1. A) aliens.
  2. B) licensees.
  3. C) trespassers.
  4. D) invitees.

Answer: D

37

Malcolm was involved in an auto accident. He was judged to be 20 percent at fault in the accident, and the other party was judged to be 80 percent at fault. Malcolm's actual damages were $40,000. Under a pure comparative negligence rule, how much will Malcolm receive for his injuries?

  1. A) $8,000
  2. B) $24,000
  3. C) $32,000
  4. D) $40,000

Answer: C

38

Louise was in a hurry and tried to cross the street in the middle of the block rather than at a street corner. A car struck her. Even though Louise placed herself in danger, she may still be able to collect for her injuries if the driver had an opportunity to avoid hitting her but failed to do so. This rule is called the

  1. A) last clear chance rule.
  2. B) collateral sources rule.
  3. C) alternative dispute resolution rule.
  4. D) joint and several liability rule.

Answer: A

39

Bruce believes a local manufacturer is responsible for contaminating some land he owns. He filed suit against the company. Rather than have the case go to court, the manufacturing company's legal team suggested mediation or arbitration to settle the case. Methods that are employed to resolve legal disputes without litigation, such as mediation, are called

  1. A) collateral source rules.
  2. B) alternative dispute resolution techniques.
  3. C) joint and several liability techniques.
  4. D) comparative negligence rules.

Answer: B

40

Jan was injured in a work-related auto accident. She sued the other driver, and the case went to court. While questioning Jan, the defendant's lawyer asked if her injuries and lost earnings were covered under workers compensation. Jan's lawyer objected to the question. The judge ruled the question was improper and instructed the jury to disregard the question. Based on the judge's reaction to the question, which of the following rules is in force where this trial took place?

  1. A) the joint and several liability rule
  2. B) the last clear chance rule
  3. C) the comparative negligence rule
  4. D) the collateral source rule

Answer: D

41

Trisha was injured when the delivery truck for a local furniture store struck her. The delivery driver claimed the brakes of the delivery truck failed, causing the accident. Trisha filed suit, and in her lawsuit named the delivery driver, the furniture store, the service station responsible for vehicle maintenance, and the manufacturer of the vehicle. Even though the manufacturer of the vehicle may be only 1 percent responsible for the accident, it may be required to pay a large percentage of the damages under the

  1. A) collateral source rule.
  2. B) assumption of risk rule.
  3. C) joint and several liability rule.
  4. D) last clear chance rule.

Answer: C

42

Compensatory damages include

  1. A) general damages and special damages.
  2. B) special damages and punitive damages.
  3. C) punitive damages and general damages.
  4. D) general damages, special damages, and punitive damages.

Answer: A

43

A person who enters or remains on the property with the occupant’s expressed or implied permission is called (a)n

  1. A) trespasser.
  2. B) resident agent.
  3. C) invitee.
  4. D) licensee.

Answer: C

44

In the context of medical malpractice, what is a "never event"?

  1. A) A medical condition that despite the best screening and technology cannot be detected.
  2. B) A pandemic that quickly spreads and infects many people.
  3. C) A medical error that should never occur.
  4. D) An event for which doctors and medical facilities cannot be held legally responsible.

Answer: C

45

Steve was involved in an auto accident. Both drivers were partially at fault for the accident. Steve's actual damages were $50,000. He was judged to be 60 percent at fault. If Steve's state has a pure comparative negligence law, how much will Steve collect?

  1. A) $0
  2. B) $20,000
  3. C) $30,000
  4. D) $50,000

Answer: B

46

Steve was involved in an auto accident. Both drivers were partially at fault for the accident. Steve's actual damages were $50,000. He was judged to be 60 percent at fault. If Steve's state has a 51 percent rule for comparative negligence, how much will Steve collect?

  1. A) $0
  2. B) $20,000
  3. C) $30,000
  4. D) $50,000

Answer: A

47

A legal wrong for which the law allows a remedy in the form of money damages is a

  1. A) crime.
  2. B) breach.
  3. C) misdemeanor.
  4. D) tort.

Answer: D

48

One requirement for proving that an act was negligent is the existence of an unbroken chain of events between the act and the injury or harm that occurred. This unbroken chain of events is called

  1. A) condition precedent.
  2. B) cause and effect.
  3. C) proximate cause.
  4. D) condition subsequent.

Answer: C

49

Under a dram shop law, a business may be held liable for damages resulting from

  1. A) the sale of alcohol.
  2. B) the creation of an unsafe work place.
  3. C) the sale of prescription drugs.
  4. D) the creation of a hostile work environment.

Answer: A

50

One tort reform proposal is capping noneconomic damages. Noneconomic damages include

  1. A) payment for time missed from work.
  2. B) payment for the cost of a hospital stay.
  3. C) payment for pain and suffering.
  4. D) payment for the cost of care provided by a physical therapist.

Answer: C

51

Under state workers compensation programs, employers may not use common law defenses to defend against claims of workers who are injured on the job. In such cases, proof of a worker's injury is proof of responsibility of the employer. Because of this characteristic, workers compensation is an example of

  1. A) personal injury.
  2. B) strict (absolute) liability.
  3. C) comparative negligence.
  4. D) tort liability.

Answer: B

52

Steve was involved in an auto accident. Both drivers were partially at fault for the accident. Steve's actual damages were $50,000. He was judged to be 20 percent at fault. If Steve's state has a contributory negligence law, how much will Steve collect?

  1. A) $0
  2. B) $10,000
  3. C) $25,000
  4. D) $40,000

Answer: A

53

Someone who is asked to come on to the property to benefit the property owner, such as customers at a store or a garbage collector, is classified as a(n)

  1. A) trespasser.
  2. B) resident agent.
  3. C) invitee.
  4. D) licensee.

Answer: C

54

Liability may arise because of a method of collecting oil or natural gas. Under this collection method, a high-pressure flow of fluid is injected underground. This collection method is called

  1. A) clear cutting.
  2. B) flow mining.
  3. C) hydraulic fracturing.
  4. D) slurry mining.

Answer: C

55

Unmanned aircraft systems are gaining in popularity. These systems are creating new liability exposures. Unmanned aircraft systems are also known as

  1. A) rockets.
  2. B) hovercraft.
  3. C) ultralights.
  4. D) drones.

Answer: D

56

Individuals renting out rooms in their home for overnight stays, individuals jointly owing a car with other owners, and individuals who give rides to people who call or text them are creating “new” liability exposures for insurers. The social change that creates these new liability exposures is called

  1. A) the millennial generation.
  2. B) the baby boom factor
  3. C) the greying of America.
  4. D) the sharing economy.

Answer: D