III Exam|IC 74, Liability Insurance|One Liners|Chapter 2
The Liability Insurance (IC – 74) is a paper in III exam for Non Life Insurance. The Liability Insurance (IC 74) is a optional paper and it comprises of 30 Points. This is the most important paper in III Examination, and most people prefer this paper.
This paper comprises of 100 Multiple Choice Questions. Aspirants need to score 60% in this paper to qualify for Licentiate.
We are providing Chapter 2: Legal Background one-liners of this paper practice of Non Life Insurance (IC – 74) which will be very important from exam point of view. This one-liners is very easy to understand.
Chapter 2: Legal Background
- The Common Law Applied By The Indian Courts Is Largely Based On English Common Law.
- Public Liability Insurance Is Concerned With The Legal Liabilities Of The Insured Arising Mainly Under The Law Of Torts Which Forms Part Of The Common Law.
- Tort:- Means A Civil Wrong Arising Out Of A Breach Of Some Duty Which Leads To A Civil Cause Of Action For Which Damages Or Compensation Are
- Law Of Tort Imposes A Duty On Each Person To Regulate His Actionsand Behaviour In Such A Manner As Not To Cause Injury To Other Person Or Damage To Their Property.
- Libel:- It Is Publication, Writing Or Broadcast Of False Statement In A Permanent Form Designed To Damage The Reputation Of Another Person
- Slander:- It Is Also Communication Of False Information Similar To Libel But In A Verbal Form.
- Assault:– It Is Unlawfully Touching Or Perpetrating Bodily Harm To A Person By Another Person.
Difference Between Tort and Crime:-
- A Tort Is Breach Of Private Rights Of Individuals Which Affect Only The Victims
- A Crime Is A Breach Of Public Rights Which Affect The Entire Society
- Secondly, In Tort The Action Is Brought By The Insured Party Who Is Paid Compensation By The Wrong Doer, As Awarded By Civil Court, Where as In
- Crime The Prosecution Is Conducted By The State And The Wrong Doer Is Pushied By Fine and/ Or Imprisonment
- Statutory Law:- Statutory Law Is The Law As Enacted By The Legislature E.G., The Public Liability Insurance Act, 1991, The Motor Vehicles Act, 1988, The Workmen, S Compensation Act, 1923 Etc.
Civil Liability There Can Arise Under:-
- Law Of Torts
- Law Of Contracts
- Types Of Torts:- Negligence And Nusiance.
- Negligence:- Means Absence Of Care, Defined As The Breach Of A Duty Caused By Omission To Do Something
A Civil Action For Negligence Can Be Taken When The Following Conditions Are Satified:-
- Existence Of Duty Of Care Towards The Injured Party
- Breach Of That Duty
- Injury Or Damage As A Consequence Of The Breach Of The Duty.
- Causal Connection Between The Breach Of Duty And The Injury Or Damage.
The Degree Of Care Required From Owners Or Occupiers Of Real Property:-
- Passers By
- Injury Or Damage Should Be A Consequence Of The Negligent Act. There Has To Be A Close Causal Relationship Between The Breach Of Duty And The Injury Or Damage.
- 1961 English Law lagon Mound Case.
- Test Of Foresee ability: House Of Lords In The Heron Ii, 1967
- The Defendant Will Be Liable For Any Type Of Damage Which Is Reasonably Foreseeable As Liable To Happen In Even The Most Unusual Case, Unless The Risk Is So Small That A Reasonable Man Would In The Whole Feel Justified In Neglecting it.
- Common Law Rule Of “Res Ipsa Loquitur” The Things Speaks For Itself
- An Employer Is Liable For Negligence Of His Employee Even If
- The Authorized Act Is Performed In An Unauthorized Manner Or
- The Act Was Prohibited Within The Scope Of Employment Or
- The Act Is Performed In Breach of Instructions
- A Principal Or An Employer Is Not Liable For The Negligence Of An Independent Contractor And His Employees Arising In Connection With The Performance Of The Contract.
- Nuisance:- Nuisance Means Act Or Omissions Which Unlawfully Interfere With Another Person’s Use Or Enjoyment Of Land Or Some Right In Connection With It.
- Public Nuisance :-Defined By Section 268 Of Indian Penal Code–
- A Person Is Guilty Of A Public Nuisance Who Does Any Act Or Is Guilty Of Illegal Omission, Which Causes Any Common Injury ,Danger Or Annoyance To The Public Or To The People In General Who Dwell Or Occupy Property In The Vicinity Or Which Must Necessarily Cause Injury, Obstruction, Danger Or Annoyance To Persons Who May Have Occasions To Use Any Public Right.
- Public Nuisance Cannot Be The Basis Of A Civil Cause Of Action And Is Death With By The State As A Crime
- Private Nuisance:- It Arises Out Of Use Of One’s Own Property In A Such Way As To Cause Physical Injury to The Property Of Another Or Interfere With His Health Or Comfort. Exam. Smoke, Smell, Fumes, Gas, Noise Etc. Leads To Civil Cause Of Action For Damages As It Is An Act Affecting Particular Individual.
Difference Between Nuisance And Negligence:-
- A Nuisance May Be The Result Of Negligence. However, Nuisance Does Not Form Part Of The Law Of Negligence.
- Liability For Nuisance May Arise In Spite Of The Fact That The Person Had Taken All Possible Care.
- In The Case Of Negligence, Liability Arises Only If A Person Fails To Exercise The Degree Of Care Which Was Demanded For A Particular Situation.
- Action For Nuisance Is Sustainable Only When There Is Actual Damage Which May Be Physical Damage To Premises Or Property Of Another Or Interfere With The Enjoyment Of The Premises.
- Tort Of Nuisance Is Relevant Particular To Pollution Liability.
- Damages:- Damages Means The Pecuniary Compensation Awarded By The Court In A Civil Action To The Victim, For Loss Or Injury Suffered Due To Breach Of Contract Or Tort.
- Special Damages: Actual Loss Of Earnings As A Result Of Injury, Medical, Nursing And Other Expenses As A Result Of Injury Funeral Expenses
- General Damages:- These Comprise Damages For
- Pain, Suffering And Distress
- Loss Of Employment Of Life And Loss Of Amenities
- Loss Of Recreational Ability And /Or
- Loss Of Reduced Expectation Of Life
- Special Damages Can Be Calculated Accurately From Records Of Actual Expenses Incurred Or Financial Loss—Loss Of Salary Etc.
- General Damages Are Estimated By Courts Taking Into Account Number Of Factors Relevant To Individual Cases.
- Multiplier Method- Lord Wright’s Formulate, Multiplier Is Known As Years’ Purchase Factor
Nance’s Method-Viscount Simon K.C.
- Property Damage – In Respect Of Damage To Property Replacing Or Repairing The Property Damaged Restored To Its Original Conditions
- Punitive Damages:- Special And General Damages Are Known As ‘Compensatory’ Damages. Some State In U.S. Award Punitive Damages As An Additional Amount.
- This Is Awarded By Way Of Punishment Or Waring To Others.
- The Punitive Damages For Specificallly Excluded From The Scope Of Cover Under Liability Insurance Policies.
- Structured Settlements:- A Structured Settlement Is A Payment Of Compensation For Damages In Instalments Rather Than In A Lump Sum Common In USA & UK
- Defences:- An Allegation Of Negligence May Be Resisted By Raising Certain Defences. The Common Defences Are:-
- Volenti Non Fit Injuria :- Means That “To Him Who Is Willing There Can Be No Injury” If A Person Voluntary Consents To Run A Risk, He Has No Right Of Action Against Anyone For Injuries Suffered As Result Of His Actions.
- Inevitable Accident:- An Accident Which Occurs Inspite Of The Exercise Of Ordinary Care, Caution And Skill. The Defendant Has To Prove That The Accident Could Be Avoided.
- Act Of God Or Vis Major:- An Event Due To Natural Causes Directly And Exclusively Without Human Intervention, Example- Storm, Earthquake, Lighting
- Emergency:-If A Person In A Moment Of Imminent Danger Acts In A Way Which Causes Injury To Another He Will Not Be Liable In Negligence.
- Contributory Negligence:- If The Plaintiff Suffers Injury Or Damages Due To His Own Fault And Partly Due To The Fault Of Defendant, The Damages Will Be Reduced According To The Blame Attaching To The Plaintiff.
- Contracting Out:- Persons May Relieve Themselves Of Or Restrict Their Liability By Incorporating Conditions In The Agreements Entered Into With Other Parties-Disclaimer Notice In Lift, Baggage In Train Etc.
Limitation-Time Barred The Provisions Of The Statute Of Limitation.
- Accord And Satisfaction:- If A Claim Is Settled By Agreement & A Binding Discharge Obtained, It Cannot Be Reopened. The Law Does Not Allow Successive Actions.
- Fatel Accident Act,1855:- If Death Of Person Is Cause By wrongful Act, Neglect Or Default Claimed By Legal Heirs.
- The Law Of Strict Liability:- Eng Case Rylands V Fletcher1868,The Neighbour Who Has Brought Something On His Own Property Which Was Not Naturally There, If It Gets On To His Neighbours , He Should Be Obliged To Make Good The Damages.
- Mukesh Textile Mills(P)Ltd. V H.R. Subramanya Sastry 1987-Sugar Factory
- The Law Of Absolute Liability:- Supreme Court Judgement- Shriram Foods & Fertilisers Indus. Oleum Gas Resulted In Personal Injuries Of Persons Mc Mehta V .Union Of India,1986
- The Persons Working In A Factory And Risiding In Surroundings Area Owes An Absolute And On-Delegable Duty To The Community To Ensure That No Hard Results To Anyone On Account Of Hazardous Or Interently Danagerous Nature Of The Activity Whihc It Has Undertaken.
- Law Of Limitation:- 3 Year In India, 6 Months In Europena Union
- Directors And Officers Personal Liability:- Shriram Food & Fertilisers Ltd. Case Feb.17,1986
- The Management Of Shriram Obtain An Undertaking From Chairman And Managing Director Of Dcmltd. -Personally Responsible For Payment Of Compensation For Such Death Or Injury.
- The Civil Liability Of Corporation For Torts Also Attached To Directors And Other Officers Of Corporation.
- Statutory Liability:- The Public Liability Insurance Act, 1991 Imposes ‘No Fault’ Liability In Respect Of Handling Of Hazardous Substances As Specified In The Act.
The Consumer Protection Act,1986:
- Provide For Better Protection Of The Interest Of Consumers And
- Make Provision For The Establishment Of Consumer Council And Other Authorities For The Settlement Of Consumers Disputes.
- Goods Means Sale of Goods Act 1930 Consumer Who Purchases
- Defect- Any Fault, Imperfection Or Shortcoming In The Quality, Quantity, Potency, Purity Or Standard, Which Is Required To Be Maintained
- Deficiency-Fault, Imperfection, Shortcoming Or Inadequacy In Quality, Nature And Manner Of Performance Which Is Required To Be Maintained.
- Complaint Means Any Allegation In Writing Made By A Complainant -Goods Suffers From Defects, Deficiency, Goods Which Will Be Hazarous To Life And Safety
- Consumer Dispute Means A Dispute Where The Person Against Whom A Complaint Has Been Made Denies Or Disputes The Allegations Contained In The Complaint.
- Manufacturer-Makes Or Manufactures Any Goods Or Parts Thereof,
Assembles Parts Thereof
- Places or Cause To Be Place His Own Mark On Any Goods Made Or Mgf. By Other Manufacturer.
- Trader Who Sells or Distributes Any Goods For Sales Includes Manufacturer Thereof
- Service Means Service Of Any Description Does Not Include Rendering Of Any Service Free Of Charge.
District Form-20 Lakhs – 30 Days
- State Commission- 20 To 100 Lakh Appeals From District Forum
- National Commission Exceeding 100 Lakhs, An Appeal Shall Lie Within 30 Days From The Order Of The National Commission To Supreme Court.
- The Three Redressal Agencies Have The Power Of Civil Court.
- No Fee For Filing A Complaint Or Filing An Appeal, Whether It Is Before State Or National Commission No Advocate Is Necessary ,
- Time Limit 2 Years From The Date Of Incident Causing Loss
- Water(Prevention And Control Of Pollution)Act 1974
- Air( Prevention And Control Of Pollution) Act,1981
- The Enviroment(Protection)Act 1986
- The Factories Act,1948
- The Central Motor Vehicles Rules, 1989, 1993
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