Imposed on a person or company engaged in hazardous or potentially dangerous business who causes harm or injury to another person or property.
Examples of Absolute Liability:
Swimming Pool
Attractive nuisance to children
Wild Animals
Lions, tigers, venomous snakes
Explosives
Dynamite, fireworks, blasting
Real-World Scenario: Swimming Pool Liability
The Setup: The Johnsons own a home with an in-ground swimming pool. They installed a 4-foot fence around it but didn't lock the gate.
What Happens: A 6-year-old neighbor child wanders into the backyard through the unlocked gate, falls into the pool, and nearly drowns. The child suffers injuries requiring hospitalization.
Legal Outcome: The Johnsons are held liable under absolute liability. Because swimming pools are considered "attractive nuisances" and inherently dangerous, the Johnsons are responsible for the child's injuries - even if they weren't home and didn't know the child was there. The dangerous condition itself creates the liability.
Key Point:
The injured party does NOT need to prove negligence. The activity itself creates liability!
Commonly applied in product liability cases. A manufacturer or seller makes an implied warranty that the product is safe.
How Strict Liability Works:
Real-World Example:
A car manufacturer sells vehicles with faulty brakes. Even if the manufacturer didn't know about the defect and took reasonable precautions, they're still liable for injuries caused by the brake failure.
Comes from the old English law "respondeat superior" (Latin for "let the master answer"). The purpose is to transfer liability to someone with greater ability to pay.
Common Vicarious Liability Situations:
Employer ↔ Employee
Employer liable for employee's negligent acts while on the job
Parent ↔ Child
Parents may be liable for negligent acts of their children
Real-World Example:
A delivery driver causes an accident while making deliveries for their company. The company (employer) can be held vicariously liable for the driver's (employee's) negligence.
| Type | Based On | Prove Negligence? |
|---|---|---|
| Absolute | Dangerous activities | No |
| Strict | Defective products | No (just prove defect) |
| Vicarious | Relationship (master/servant) | Yes (of the servant) |
Limits of Liability = The maximum amount the insurance company will pay for a particular loss or during a period of time.
A sublimit that puts a ceiling on payment for all claims arising from a single accident/occurrence.
Example: A $1,000,000 per occurrence limit means no matter how many people are injured in ONE accident, the maximum payout is $1,000,000 total for that incident.
The maximum amount available for bodily injury to a single person in an accident.
Example: A $25,000 per person limit means no individual can receive more than $25,000, even if the total policy limit is higher.
The maximum coverage available during a policy year, regardless of the number of claims or accidents.
Key Points:
General Aggregate
Total for all liability claims
Products-Completed Operations
Separate aggregate for product liability
Separately stated limits for different coverages - per person, per occurrence, or split between bodily injury and property damage.
Understanding 25/50/25 Split Limits:
$25,000
Per Person
Bodily Injury
$50,000
Per Accident
Bodily Injury (total)
$25,000
Property
Damage
Example: In a 25/50/25 policy, if 3 people are injured, each can get up to $25,000, but the total for all bodily injury cannot exceed $50,000 for that accident.
Detailed Scenario: When Split Limits Run Out
The Setup: Mike has auto insurance with 25/50/25 split limits. He causes an accident injuring 3 people in another car.
The Injuries:
What the Insurance Pays:
Mike's Problem: He owes $35,000 out of pocket ($15,000 + $5,000 + $15,000). The split limits protected the insurer, not Mike!
A single dollar limit applying to the total of damages for bodily injury AND property damage combined from one accident.
$300,000 CSL
Can be used in ANY combination for BI + PD
Flexibility Example: With a $300,000 CSL, you could pay $250,000 for bodily injury and $50,000 for property damage, OR $100,000 BI and $200,000 PD - any combination not exceeding the single limit.
Absolute Liability
Dangerous activities (no negligence needed)
Strict Liability
Defective products (just prove defect)
Vicarious Liability
Master liable for servant's acts
Per Occurrence
Max for one accident
Per Person
Max for one individual
Aggregate
Max for policy year (resets annually)
Split Limits
Separate limits (e.g., 25/50/25)
Combined Single
One limit for BI + PD combined