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137-428: NIED began to develop in the late nineteenth century, but only in a very limited form, in the sense that plaintiffs could recover for consequential emotional distress as a component of damages when a defendant negligently inflicted physical harm upon them. By 1908, most industrial U.S. states had adopted the "physical impact" form of NIED. However, NIED started developing into its more mature and more controversial form in

274-469: A conductor carrying a direct current , Faraday established the basis for the concept of the electromagnetic field in physics. His inventions of electromagnetic rotary devices were the foundation of the practical use of electricity in technology. In 1881, Sir Joseph Swan , inventor of the first feasible incandescent light bulb , supplied about 1,200 Swan incandescent lamps to the Savoy Theatre in

411-422: A premium . Liability insurance is designed to offer specific protection against third-party insurance claims, i.e., payment is not typically made to the insured, but rather to someone suffering loss who is not a party to the insurance contract. In general, damage caused intentionally as well as contractual liability are not covered under liability insurance policies. When a claim is made, the insurance carrier has

548-656: A sexually transmitted disease ). In 1994, the U.S. Supreme Court for the first time recognized NIED as part of federal common law, by holding that railroad workers could pursue NIED claims against their employers under the Federal Employers Liability Act . The Court recognized only the pre- Dillon form of NIED, though, in that the plaintiff had to be within a zone of danger to recover in the absence of physical injury. In 1999, Hawaii took NIED even further by expressly holding that "damages may be based solely upon serious emotional distress, even absent proof of

685-527: A 1966 essay and in The Unbound Prometheus (1972) standardized scholarly definitions of the term, which was most intensely promoted by Alfred Chandler (1918–2007). However, some continue to express reservations about its use. In 2003, Landes stressed the importance of new technologies, especially the internal combustion engine , petroleum, new materials and substances, including alloys and chemicals , electricity and communication technologies, such as

822-488: A SIR must still provide an "immediate, 'first dollar' defense" (subject, of course, to their right to later recover the SIR amount from the insured) unless the policy expressly imposes exhaustion of the SIR as a precondition to the duty to defend. In many countries, liability insurance is a compulsory form of insurance for those at risk of being sued by third parties for negligence . The most usual classes of mandatory policy cover

959-520: A claim for negligent infliction of emotional distress and remanded the case to the trial court for consideration of a claim for intentional infliction of emotional distress. Jurisdictions that have rejected the claim of negligent infliction of emotional distress do not forbid the recovery of damages for mental injuries . Instead, these jurisdictions usually allow recovery for emotional distress where such distress: Second Industrial Revolution The Second Industrial Revolution , also known as

1096-527: A claim for negligent infliction of emotional distress. On appeal, the Supreme Court of Texas observed that the facts did not support a claim of negligence. Rather, the Court noted, the facts clearly supported a claim of an intentional injury by the defendant and it was evident that the claim had been cast as "negligence" solely to obtain insurance coverage. The Court then went on to hold that Texas did not recognize

1233-472: A cohesive package. Employment practices liability arose in the 1980s, after U.S. employees began to obtain jury verdicts against their employers due to workplace actions such as wrongful dismissal . Insurance Services Office (ISO), a vendor of standard form contract insurance policies, revised the Commercial General Liability insurance policy form to exclude coverage for torts related to

1370-432: A complete exclusion to coverage. It is irrelevant whether the plaintiff will prevail or actually prevails on the claim; rather, the test is whether the claim if proven would be covered. Vague or ambiguous allegations broad enough to encompass a range of possibilities both within and without coverage are usually construed in favor of a potential for coverage, but speculation about unpled allegations (that is, matters on which

1507-458: A court later determines that there was a duty to defend all along, then it will hold that the insurer necessarily breached that duty, and may also hold that the insurer is subject to tort liability for bad faith. So insurers will often defend under a reservation of rights rather than decline coverage altogether. Outside of the United States and Canada, liability insurers generally do not assume

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1644-401: A direct result of such bodily injury or death. U.S. employers often carry Employers' Liability coverage (which is not necessarily compulsory) to protect themselves from lawsuits from such persons who would still have the right to sue them in the courts, such as an employee's spouse who claims loss of consortium as a result of the employee's bodily injury on the job which was allegedly caused by

1781-439: A duty to defend based on mere allegations that show a potential for coverage, but may not have a duty to indemnify if the evidence supporting a final judgement against the insured also takes those claims or causes of action completely outside of the policy's scope of coverage. Conversely, it is also possible that an insurer may have no duty to defend based on the initial allegations of the plaintiff's original complaint, but may have

1918-468: A duty to defend, in the sense of assuming a direct responsibility for hiring and paying a lawyer to defend the insured. Many write policies which promise to reimburse the insured for reasonable defense costs incurred with the insurer's consent, but this is essentially a form of indemnification (covered in the next section below), under which the insured remains primarily responsible for hiring a lawyer to defend themselves. Such insurers often expressly reserve

2055-403: A duty to indemnify based upon the policyholder's proven liability. While the duty to defend and the duty to settle are rare outside of English-speaking North America, the duty to indemnify is universally found in liability insurance policies. In some jurisdictions, there is a third duty, the duty to settle a reasonably clear claim against the insured. This duty is generally triggered only if

2192-410: A four-stroke engine of his own design between the rear wheels, with a very advanced coil ignition and evaporative cooling rather than a radiator. Power was transmitted by means of two roller chains to the rear axle. It was the first automobile entirely designed as such to generate its own power, not simply a motorized-stage coach or horse carriage. Benz began to sell the vehicle, advertising it as

2329-417: A further range of perils that people insure against and, consequently, the number and range of liability policies has increased in line with the rise of contingency fee litigation offered by lawyers (sometimes on a class action basis). Such policies fall into three main classes: Industry and commerce are based on a range of processes and activities that have the potential to affect third parties (members of

2466-457: A grace period for reporting after the end of the policy period to protect insureds who are sued at the very end of the policy term). Claims-made policies enable insurers to again sharply limit their own long-term liability on each policy and in turn, to close their books on policies and record a profit. Hence, such policies are much more affordable than occurrence policies and are very popular for that reason. Of course, claims-made policies shift

2603-799: A legal defence or settlement can far exceed premium costs. In some cases, the costs of a claim could be enough to shut down a small business. Businesses must consider all potential risk exposures when deciding whether liability insurance is needed, and, if so, how much coverage is appropriate and cost-effective. Those with the greatest public liability risk exposure are occupiers of premises where large numbers of third parties frequent at leisure including shopping centres, pubs, clubs, theatres, cinemas, sporting venues, markets, hotels, and resorts. The risk increases dramatically when consumption of alcohol and sporting events are included. Certain industries such as security and cleaning are considered high risk by underwriters. In some cases underwriters even refuse to insure

2740-503: A lower share of liability claims as accidents related to injuries and property damages have declined. In continental Europe, the largest liability insurance markets are Germany, France, Italy and Spain. Together they made up almost USD 22 billion of global liability premiums in 2013. Typically governed by civil law systems, these markets rely on local conditions and historical experience to determine which liability policies and covers are available. Penetration ranges from 0.16% to 0.25%, which

2877-404: A particularly egregious fashion may also be held liable for the tort of insurance bad faith , under which the insured may be able to recover compensatory damages in excess of the policy limits, as well as punitive damages. Traditionally, liability insurance was written on an occurrence basis, meaning that the insurer agreed to defend and indemnify against any loss which allegedly "occurred" during

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3014-458: A position of trading off timely reporting of every "potential" claim (i.e., every slip-and-fall on their premises), even if those never ripen into actual lawsuits, and thereby protect their right to coverage, at the expense of making themselves look more risky and driving up their own insurance premiums. Or they can wait until they actually get sued, but then they run the risk that the claim will be denied because it should have been reported back when

3151-403: A practical reality, but the prevailing economic and industrial conditions meant that it would be several decades before transoceanic steamship travel emerged as a viable industry. Highly efficient multiple expansion steam engines began being used on ships, allowing them to carry less coal than freight. The oscillating engine was first built by Aaron Manby and Joseph Maudslay in the 1820s as

3288-412: A precondition to the insurer's duty. It is generally triggered when a final judgement is entered against the insured, and it is satisfied when the insurer pays such covered amounts to the plaintiff who obtained the judgement. Most policies provide for payment of monetary damages as well as any costs, expenses, and attorney's fees which the plaintiff may also be entitled to as the prevailing party. Unlike

3425-400: A predicate physical injury." It is generally disfavored by most states because it appears to have no definable parameters and because so many potential claims can be made under it. The situations that would give rise to such a claim are difficult to define. Because of this substantial uncertainty, most legal theorists find the theory to be unworkable in practice. A corollary of this critique

3562-418: A reasonable opportunity to settle actually arises, either because the plaintiff makes a settlement offer, or the insurer is aware of information to the effect that the plaintiff would accept a settlement offer. The insurer is neither required to initiate an offer to a plaintiff likely to refuse it, nor required to accept an outrageous offer from a plaintiff who filed a frivolous lawsuit and cannot prevail against

3699-401: A right to defend the insured, presumably so they can intervene to protect their own interests if the insured's counsel of choice is not providing an adequate defense against the underlying claim. An indemnity case arises when an individual is obliged to pay for the loss or damage incurred by another person in an event of an accident, collision etc. The duty of indemnity generally originates from

3836-444: A settlement in which it would have to pay only its policy limits (either because the plaintiff agrees to lower their demand or the insured or another primary or excess insurer agrees to contribute the difference). Generally, an insurer who breaches any of the foregoing duties will be held liable for breach of contract . In most jurisdictions, the result is a judgment requiring payment of the insured's expectation damages—the sums that

3973-500: A substance resembling paraffin wax. In 1850 Young built the first truly commercial oil-works and oil refinery in the world at Bathgate , using oil extracted from locally mined torbanite , shale, and bituminous coal to manufacture naphtha and lubricating oils; paraffin for fuel use and solid paraffin were not sold till 1856. Cable tool drilling was developed in ancient China and was used for drilling brine wells. The salt domes also held natural gas, which some wells produced and which

4110-414: A type of direct-acting engine that was designed to achieve further reductions in engine size and weight. Oscillating engines had the piston rods connected directly to the crankshaft, dispensing with the need for connecting rods. To achieve this aim, the engine cylinders were not immobile as in most engines, but secured in the middle by trunnions which allowed the cylinders themselves to pivot back and forth as

4247-421: A valid policy. Many also require insurance companies to provide a default fund to offer compensation to those physically injured in accidents where the driver did not have a valid policy. In many countries, claims are dealt with under common law principles established through a long history of case law and if litigated, are made by way of civil actions in the relevant jurisdiction. Product liability insurance

Negligent infliction of emotional distress - Misplaced Pages Continue

4384-446: Is an unavoidable aspect of the 'human condition.' The emotional distress for which monetary damages may be recovered, however, ought not to be that form of acute emotional distress or the transient emotional reaction to the occasional gruesome or horrible incident to which every person may potentially be exposed in an industrial and sometimes violent society. . . . The overwhelming majority of 'emotional distress' which we endure, therefore,

4521-500: Is done by sending a copy of the complaint along with a cover letter referencing the relevant insurance policy or policies and demanding an immediate defense. In most U.S. states and Canada, the insurer generally has four main options at this point, to: The duty to defend is generally broader than the duty to indemnify, because most (but not all) policies that provide for such a duty also specifically promise to defend against claims that are groundless, false, or fraudulent. Therefore,

4658-400: Is due to the country’s English law derived legal framework, which has increased demand for employers’ liability insurance. Australia has mandatory covers for aviation, maritime oil pollution and residential construction and, in certain states, for medical practitioners, property brokers and stock brokers. Liability insurance premiums have grown at an average annual rate of 11% since 2000. China

4795-539: Is far more prevalent in the advanced than emerging markets. The advanced markets accounted for 93% of global liability premiums in 2013, while their share of global non-life premiums was 79%. The US is by far the largest market , with 51% of the global liability premiums written in 2013. This is due to the size of the US economy and high penetration of liability insurance (0.5% of GDP). In 2013, US businesses spent USD 84 billion on commercial liability covers, of which USD 50 billion

4932-423: Is generally considered to be the true birth of NIED as a separate tort. Twelve years after Dillon , California expanded NIED again, by holding that a relative could recover even where the underlying physical injury was de minimis (unnecessary medications and medical tests) if the outcome was foreseeable (the breakup of the plaintiffs' marriage as a result of the defendants' negligent and incorrect diagnosis of

5069-481: Is illustrated by cases such as those involving Mercedes-Benz for unstable vehicles and Perrier for benzene contamination , but the full list covers pharmaceuticals and medical devices, asbestos, tobacco, recreational equipment, mechanical and electrical products, chemicals and pesticides, agricultural products and equipment, food contamination, and all other major product classes. Laws regarding workers compensation, which compensate an employee , vary by country, but

5206-577: Is low compared to the common law countries such as the US, the UK and Australia. Japan and Australia are the largest markets in the Asia Pacific region, with commercial liability premiums of USD 6.0 billion and USD 4.8 billion, respectively, in 2013. At 0.12% of GDP, the penetration of liability insurance in Japan is much lower than in other advanced economies. In Australia, penetration is much higher at 0.32% of GDP. This

5343-463: Is not a compulsory class of insurance in all countries, but legislation such as the EC Directive on Product Liability (25/7/85) and the UK's Consumer Protection Act 1987 create a strict liability regime "without fault", and businesses manufacturing or supplying goods often carry some form of product liability insurance, usually as part of a combined liability policy. The scale of potential liability

5480-444: Is not compensable. An additional criticism of the tort is that it leads to abuse of liability insurance coverage. Most liability insurance policies provide for coverage of negligently inflicted injuries but exclude coverage of intentionally inflicted injuries . If a victim is intentionally injured by a person, many theorists perceive that the victim will tend to recast the claim as being one for negligence in order to fall within

5617-430: Is public and product liability. This is followed by professional indemnity and employers’ liability (cover for employment-related accidents and illnesses). There has been a significant shift in the sub-segments of UK liability insurance. In the last decade, the share of professional indemnity has increased from about 14% to 32%, highlighting the shift towards a more services-driven economy. Manufacturing, meanwhile, comprises

Negligent infliction of emotional distress - Misplaced Pages Continue

5754-662: Is regulated and underwritten separately from liability insurance. Just as the Insurance Services Office develops standard liability insurance forms and obtains approval for them from state insurance commissioners, the National Council on Compensation Insurance (NCCI) and various state rating bureaus provide similar services in the workers' compensation context. U.S. workers' compensation insurance generally covers only bodily injury to and death of employees, but it does not always cover other persons who may suffer injury as

5891-669: Is shown by the fact that production of the Ford Model T used 32,000 machine tools, most of which were powered by electricity. Henry Ford is quoted as saying that mass production would not have been possible without electricity because it allowed placement of machine tools and other equipment in the order of the work flow. The first paper making machine was the Fourdrinier machine , built by Sealy and Henry Fourdrinier , stationers in London. In 1800, Matthias Koops , working in London, investigated

6028-535: Is that the tort runs the risk (in the bystander NIED context) of overcompensating plaintiffs for distress which would have occurred anyway regardless of the cause of death of the decedent. In a landmark decision of the Supreme Court of California which severely limited the availability of bystander NIED, Associate Justice David Eagleson wrote in Thing v. La Chusa , 48 Cal. 3d 644 (1989): No policy supports extension of

6165-406: Is the ninth largest commercial liability market globally, with premiums of USD 3.5 billion in 2013 and strong annual average growth of 22% since 2000. However, penetration remains low at 0.04% of GDP. Growth has been driven by increasing risk awareness and regulatory changes. Liability insurers have one, two or three major duties, depending upon the jurisdiction: The duty to defend is prevalent in

6302-462: Is to negotiate a policy with a retained limit or self-insured retention (SIR), which is somewhat like a deductible. With such policies, the insured is essentially agreeing to self-insure and self-defend for smaller claims, and to tender and demand a defense only for liability claims that exceed a certain value. However, writing such insurance is itself risky for insurers. The California Courts of Appeal have held that primary insurers on policies with

6439-845: The First Industrial Revolution that began in Britain in the late 18th century that then spread throughout Western Europe. It came to an end with the start of the World War I . While the First Revolution was driven by limited use of steam engines , interchangeable parts and mass production , and was largely water-powered, especially in the United States, the Second was characterized by the build-out of railroads, large-scale iron and steel production, widespread use of machinery in manufacturing, greatly increased use of steam power, widespread use of

6576-608: The Technological Revolution , was a phase of rapid scientific discovery , standardisation , mass production and industrialisation from the late 19th century into the early 20th century. The First Industrial Revolution , which ended in the middle of the 19th century, was punctuated by a slowdown in important inventions before the Second Industrial Revolution in 1870. Though a number of its events can be traced to earlier innovations in manufacturing, such as

6713-521: The bike boom of the 1890s. Road networks improved greatly in the period, using the Macadam method pioneered by Scottish engineer John Loudon McAdam , and hard surfaced roads were built around the time of the bicycle craze of the 1890s. Modern tarmac was patented by British civil engineer Edgar Purnell Hooley in 1901. German inventor Karl Benz patented the world's first automobile in 1886. It featured wire wheels (unlike carriages' wooden ones) with

6850-567: The clerk , or writer, ceased to be a high-status job. By the 1880s chemical processes for paper manufacture were in use, becoming dominant by 1900. The petroleum industry , both production and refining , began in 1848 with the first oil works in Scotland. The chemist James Young set up a tiny business refining the crude oil in 1848. Young found that by slow distillation he could obtain a number of useful liquids from it, one of which he named "paraffine oil" because at low temperatures it congealed into

6987-582: The telegraph , telephone, and radio. One author has called the period from 1867 to 1914, during which most of the great innovations were developed, "The Age of Synergy " since the inventions and innovations were engineering and science-based . A synergy between iron and steel, railroads and coal developed at the beginning of the Second Industrial Revolution. Railroads allowed cheap transportation of materials and products, which in turn led to cheap rails to build more roads. Railroads also benefited from cheap coal for their steam locomotives. This synergy led to

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7124-451: The telegraph , use of petroleum and the beginning of electrification . It also was the period during which modern organizational methods for operating large-scale businesses over vast areas came into use. The concept was introduced by Patrick Geddes , Cities in Evolution (1910), and was being used by economists such as Erich Zimmermann (1951), but David Landes ' use of the term in

7261-490: The 1860s meant that railways could finally be made from steel at a competitive cost. Being a much more durable material, steel steadily replaced iron as the standard for railway rail, and due to its greater strength, longer lengths of rails could now be rolled. Wrought iron was soft and contained flaws caused by included dross . Iron rails could also not support heavy locomotives and were damaged by hammer blow . The first to make durable rails of steel rather than wrought iron

7398-464: The 1890s and for households during the 1920s. Gasoline was an unwanted byproduct of oil refining until automobiles were mass-produced after 1914, and gasoline shortages appeared during World War I. The invention of the Burton process for thermal cracking doubled the yield of gasoline, which helped alleviate the shortages. Synthetic dye was discovered by English chemist William Henry Perkin in 1856. At

7535-734: The 20th century with early factory electrification and the production line ; it ended at the beginning of World War I. Starting in 1947, the Information Age is sometimes also called the Third Industrial Revolution. The Second Industrial Revolution was a period of rapid industrial development, primarily in the United Kingdom, Germany, and the United States, but also in France, the Low Countries , Italy and Japan. It followed on from

7672-466: The Benz Patent Motorwagen, in the late summer of 1888, making it the first commercially available automobile in history. Liability insurance Liability insurance (also called third-party insurance ) is a part of the general insurance system of risk financing to protect the purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims and protects

7809-528: The City of Westminster, London, which was the first theatre, and the first public building in the world, to be lit entirely by electricity. Swan's lightbulb had already been used in 1879 to light Mosley Street, in Newcastle upon Tyne , the first electrical street lighting installation in the world. This set the stage for the electrification of industry and the home. The first large scale central distribution supply plant

7946-489: The U. S. The first primary product was kerosene for lamps and heaters. Similar developments around Baku fed the European market. Kerosene lighting was much more efficient and less expensive than vegetable oils, tallow and whale oil. Although town gas lighting was available in some cities, kerosene produced a brighter light until the invention of the gas mantle . Both were replaced by electricity for street lighting following

8083-405: The United States and Canada, where most liability insurance policies provide that the insurer "has the right and duty" to defend the insured against all "suits" to which the policies apply. It is usually triggered when the insured is sued (or in some instances, given pre-suit notice that they are about to be sued) and subsequently "tenders" defense of the claim to its liability insurer. Usually this

8220-410: The United States policies typically include Part One for compulsory coverage and Part Two for non-compulsory coverage. Original jurisdiction over workers' compensation claims has been diverted in much of the United States to administrative proceedings outside of the federal and state courts. They operate as no-fault schemes in which the employee need not prove the employer's fault; it is sufficient for

8357-524: The Workers’ Accident Insurance system put into place by Otto von Bismarck in 1881 is often cited as a model for Europe and later the United States. In many legal jurisdictions workers compensation is compulsory depending upon the business, including the United Kingdom and many states of the United States with the notable exception of Texas as of 2018. Regardless of compulsory requirements, businesses may purchase insurance voluntarily, and in

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8494-421: The agreement in between insurer and insured which protects the insured against any liability, damage or loss. The duty to indemnify is the insurer's duty to pay all covered sums for which the insured is held liable, up to the limits of coverage and subject to any deductibles, retained limits, self-insured retention, excess payments, or any other amounts of money which the insured is required to pay out-of-pocket as

8631-472: The alternative, the insurer may defend under a reservation of rights: it sends a letter to the insured reserving its rights to immediately withdraw from the insured's defense if it becomes clear there is no coverage or no potential for coverage for the entire complaint, and to recover from the insured any funds expended to that point on defending against any particular claims or causes of action which were never covered or even potentially covered to begin with. If

8768-414: The amount being claimed, especially in so-called "nuisance" cases where the insured must be defended even though no liability is ever brought to trial. Commercial liability is an important segment for the insurance industry. With premium income of USD 160 billion in 2013, it accounted for 10% of global non-life premiums of USD 1 550 billion, or 23% of the global commercial lines premiums. Liability insurance

8905-437: The application of an exposure, continuous injury, or injury-in-fact trigger and others holding that only the policy in effect at the time the injuries or damages are discovered is implicated. The insurance industry reacted in two ways to these developments. First, premiums on new occurrence policies skyrocketed, since the industry had come to a better appreciation of the true risks associated with such policy language. Second,

9042-490: The attention of a court, even though it also places the insured in the awkward position of defending itself against two lawsuits: the plaintiff's original complaint and the insurer's complaint for declaratory judgment. Indeed, in some jurisdictions an insurer acting in good faith must seek declaratory relief from a court before declining to defend its insured (e.g., Illinois) or withdrawing from its defense pursuant to an earlier reservation of rights (e.g., Georgia). Finally,

9179-623: The basis for the accelerated construction of railways throughout the world in the late nineteenth century. The first commercially available steel rails in the US were manufactured in 1867 at the Cambria Iron Works in Johnstown, Pennsylvania . Steel rails lasted over ten times longer than did iron, and with the falling cost of steel, heavier weight rails were used. This allowed the use of more powerful locomotives, which could pull longer trains, and longer rail cars, all of which greatly increased

9316-774: The belated discovery of underground pollution, but from the time a plaintiff received the first of many cumulative exposures to a toxic substance or when the defendant initially released pollutants, and that such losses continued to keep occurring through every subsequent policy period (though they did not ripen into lawsuits until much later). The result was that insurers who had long ago closed their books on policies written 20, 30, or 40 years earlier now found that their insureds were being hit with hundreds of thousands of lawsuits that potentially implicated those old policies. A body of law has developed concerning which policies must respond to these continuous injury or "long tail" claims, with many courts holding multiple policies may be implicated by

9453-450: The birth of the modern ship as disparate technological advances came together. The screw propeller was introduced in 1835 by Francis Pettit Smith who discovered a new way of building propellers by accident. Up to that time, propellers were literally screws, of considerable length. But during the testing of a boat propelled by one, the screw snapped off, leaving a fragment shaped much like a modern boat propeller. The boat moved faster with

9590-490: The blast furnace as it greatly reduced the fuel consumption for making pig iron, and was one of the most important technologies developed during the Industrial Revolution . Falling costs for producing wrought iron coincided with the emergence of the railway in the 1830s. The early technique of hot blast used iron for the regenerative heating medium. Iron caused problems with expansion and contraction, which stressed

9727-400: The broken propeller. The superiority of screw against paddles was taken up by navies. Trials with Smith's SS Archimedes , the first steam driven screw, led to the famous tug-of-war competition in 1845 between the screw-driven HMS  Rattler and the paddle steamer HMS  Alecto ; the former pulling the latter backward at 2.5 knots (4.6 km/h). The first seagoing iron steamboat

9864-403: The burden to insureds to immediately report new claims to insurers. They also force insureds to become more proactive about risk management and finding ways to control their own long-tail liability. Claims-made policies often include strict clauses that require insureds to report even potential claims and that combine an entire series of related acts into a single claim. This puts insureds in

10001-440: The complaint are clearly not covered. An insurer can choose to defend unconditionally without reserving any rights, but by doing so, it waives (or is later estopped from asserting) the absence of coverage as a defense to the duty to defend and impliedly commits to defending the insured to a final judgment or a settlement regardless of how long it takes (unless the policy expressly provides that defense costs reduce policy limits). In

10138-427: The complaint is totally silent) is insufficient to create a potential for coverage. Some jurisdictions allow extrinsic evidence to be considered, either because it is expressly described in the complaint or it is relevant to the facts expressly alleged in the complaint. If there is a duty to defend, it means the insurer must defend the insured against the entire lawsuit even if most of the claims or causes of action in

10275-414: The conditions, exclusions, and warranties included within the standard policies can be a burden. A company owning an industrial facility, for instance, may buy pollution insurance to cover lawsuits resulting from environmental accidents. Many small businesses do not secure general or professional liability insurance due to the high cost of premiums. However, in the event of a claim, out-of-pocket costs for

10412-407: The coverage of the insurance policy. The Texas case of Boyles v. Kerr , 855 S.W.2d 593 (Tex. 1993) is illustrative. In this case, the defendant secretly videotaped himself engaging in sexual activities with the plaintiff . The defendant then showed this videotape to numerous individuals and caused severe distress to the plaintiff. The plaintiff brought suit against the defendant, asserting

10549-521: The crankshaft rotated, hence the term oscillating . It was John Penn , engineer for the Royal Navy who perfected the oscillating engine. One of his earliest engines was the grasshopper beam engine . In 1844 he replaced the engines of the Admiralty yacht, HMS  Black Eagle with oscillating engines of double the power, without increasing either the weight or space occupied, an achievement which broke

10686-560: The drivers of motor vehicles ( vehicle insurance ), those who offer professional services to the public, those who manufacture products that may be harmful, constructors and those who offer employment. The reason for such laws is that the classes of insured are deliberately engaging in activities that put others at risk of injury or loss. Public policy therefore requires that such individuals should carry insurance so that, if their activities do cause loss or damage to another, money will be available to pay compensation . In addition, there are

10823-414: The duty (and right) to defend the insured. The legal costs of a defence normally do not affect policy limits unless the policy expressly states otherwise; this default rule is useful because defence costs tend to soar when cases go to trial. In many cases, the defense portion of the policy is actually more valuable than the insurance, as in complicated cases, the cost of defending the case might be more than

10960-413: The duty to defend is normally triggered by a potential for coverage. The test for a potential for coverage is whether the complaint adequately pleads at least one claim or cause of action which would be covered under the terms of the policy if the plaintiff were to prevail on that claim at trial, and also does not plead any allegations which would entirely vitiate an essential element of coverage or trigger

11097-405: The duty to defend, the duty to indemnify extends only to those claims or causes of action in the plaintiff's complaint which are actually covered under the policy, since a final judgement against the insured would normally be supported by a factual record in the trial court showing exactly why the plaintiff prevailed (or failed to prevail) on each claim or cause of action. Thus, an insurer could have

11234-400: The employee to prove that the injury occurred in the course of employment. If a third party other than the employer actually caused the injury, then the workers' compensation insurer (or self-insured employer) who is ordered to pay an employee's claim is usually entitled to initiate a subrogation action in the regular court system against the third party. In turn, workers' compensation insurance

11371-481: The employer's negligence. Workers' compensation also does not cover intangible torts that merely cause emotional distress, or torts arising from management negligence and liability to shareholders. General management liability coverage may include directors and officers (D&O) liability insurance, employment practices liability (EPL) insurance, fiduciary liability insurance, and "special crime" insurance (kidnap, ransom, and extortion), either individually or as part of

11508-472: The establishment of a machine tool industry, the development of methods for manufacturing interchangeable parts , as well as the invention of the Bessemer process and open hearth furnace to produce steel, later developments heralded the Second Industrial Revolution, which is generally dated between 1870 and 1914 (the beginning of World War I ). Advancements in manufacturing and production technology enabled

11645-469: The first mass-produced, high-pressure and high-revolution marine engines. The revolution in naval design led to the first modern battleships in the 1870s, evolved from the ironclad design of the 1860s. The Devastation -class turret ships were built for the British Royal Navy as the first class of ocean-going capital ship that did not carry sails , and the first whose entire main armament

11782-454: The heat and pollution caused by gas lighting, and reducing the fire hazard to the extent that the cost of electricity for lighting was often offset by the reduction in fire insurance premiums. Frank J. Sprague developed the first successful DC motor in 1886. By 1889 110 electric street railways were either using his equipment or in planning. The electric street railway became a major infrastructure before 1920. The AC motor ( Induction motor )

11919-548: The idea of using wood to make paper, and began his printing business a year later. However, his enterprise was unsuccessful due to the prohibitive cost at the time. It was in the 1840s, that Charles Fenerty in Nova Scotia and Friedrich Gottlob Keller in Saxony both invented a successful machine which extracted the fibres from wood (as with rags) and from it, made paper. This started a new era for paper making , and, together with

12056-399: The industry began issuing claims-made policies, in which the policy covers only those claims that are first "made" against the insured during the policy period. A related variation is the claims-made-and-reported policy, in which the policy covers only those claims that are first made against the insured and reported by the insured to the insurer during the policy period (which often include

12193-450: The insurance industry was up to in trying to use claims-made policies to push a substantial amount of risk back to insureds, and claims-made coverage was the subject of extensive litigation in several countries throughout the 1970s, 1980s, and 1990s. This led to important decisions of the U.S. Supreme Court in 1978 and 1993 and of the Supreme Court of Canada in 1993. One way for businesses to cut down their liability insurance premiums

12330-408: The insured has a right to independent counsel, also known as Cumis counsel . The insurer can also seek a declaratory judgment against the insured that there is no coverage for the claim, or at least no potential for coverage. This option generally allows the insurer to insulate itself from a bad faith claim, in the sense that an insurer acts in good faith when it promptly brings coverage disputes to

12467-462: The insured if the purchaser is sued for claims that come within the coverage of the insurance policy . Originally, individual companies that faced a common peril formed a group and created a self-help fund out of which to pay compensation should any member incur loss (in other words, a mutual insurance arrangement). The modern system relies on dedicated carriers, usually for-profit, to offer protection against specified perils in consideration of

12604-451: The insured under any theory. The duty to settle is of the greatest importance in the scenario where the insured may have some liability exposure (i.e., there is some evidence apparently linking the insured to the causation of the plaintiff's alleged injuries), the plaintiff has evidence of substantial damages which may exceed policy limits, and the plaintiff makes a settlement demand which equals or exceeds policy limits. In that situation,

12741-428: The insured while participating in trial.) While the insurer may be indifferent in this scenario as to whether it pays out its policy limits before or after trial, the insured is most certainly not. If the first outcome above were to occur, the insured may be held liable to the plaintiff for a sum far in excess of both the pretrial settlement offer and the policy limits. Then after the insurer pays out its policy limits,

12878-449: The insurer bear no liability. If the first outcome occurs, then it is essentially "nothing gained nothing lost" from the insurer's point of view, because either way it will pay out its policy limits. (For simplicity, this analysis disregards sunk costs in the form of defense costs incurred to that point, as well as additional costs sustained by the insurer in defending the insured to a verdict at trial, and opportunity costs sustained by

13015-406: The insurer can decline to defend and also refrain from seeking declaratory judgment. If the insurer is absolutely certain that there is no coverage or no potential for coverage, then in most jurisdictions the insurer adequately preserves its defenses to coverage by sending a letter to the insured explaining its position and declining to provide a defense. But this option can be very risky, because if

13152-401: The insurer chooses to defend, it may either defend the claim with its own in-house lawyers (where allowed), or give the claim to an outside law firm on a "panel" of preferred firms which have negotiated a standard fee schedule with the insurer in exchange for a regular flow of work. The decision to defend under a reservation of rights must be undertaken with extreme caution in jurisdictions where

13289-443: The insurer is subject to a duty to settle reasonably clear claims. The standard judicial test is that an insurer must settle a claim if a reasonable insurer, notwithstanding any policy limits, would have settled the claim. This does not require an insurer to accept or pay settlement offers that actually exceed policy limits, but in that instance, the insurer must discharge its duty to settle by at least making an attempt to bring about

13426-467: The insurer should have paid under its duty to indemnify. But this will be circumscribed by the policy limits, and will generally not compensate the insured for losses incurred as a consequence of the insurer's breach, such as lost business opportunities when money intended to be invested in those opportunities was diverted (or seized) to pay judgments. In the United States (and to a lesser extent, Canada), an insurer who breaches any of these three duties in

13563-409: The insurer's interests conflict with the insured's interests, because the insurer has an incentive to not immediately settle. That is, if the insurer refuses to settle and the case then goes to trial, there are only two possible outcomes: (1) the insured loses and the insurer must pay the ensuing judgment against the insured up to the policy limits, or (2) the insured wins, meaning both the insured and

13700-505: The invention of the fountain pen and the mass-produced pencil of the same period, and in conjunction with the advent of the steam driven rotary printing press , wood based paper caused a major transformation of the 19th century economy and society in industrialized countries. With the introduction of cheaper paper, schoolbooks, fiction, non-fiction, and newspapers became gradually available by 1900. Cheap wood based paper also allowed keeping personal diaries or writing letters and so, by 1850,

13837-523: The iron and caused failure. Edward Alfred Cowper developed the Cowper stove in 1857. This stove used firebrick as a storage medium, solving the expansion and cracking problem. The Cowper stove was also capable of producing high heat, which resulted in very high throughput of blast furnaces. The Cowper stove is still used in today's blast furnaces. With the greatly reduced cost of producing pig iron with coke using hot blast, demand grew dramatically and so did

13974-519: The keel's strength. In addition to its steam-powered paddle wheels , the ship carried four masts for sails. Brunel followed this up with the Great Britain , launched in 1843 and considered the first modern ship built of metal rather than wood, powered by an engine rather than wind or oars, and driven by propeller rather than paddle wheel. Brunel's vision and engineering innovations made the building of large-scale, propeller-driven, all-metal steamships

14111-423: The laying of 75,000 miles of track in the U.S. in the 1880s, the largest amount anywhere in world history. The hot blast technique, in which the hot flue gas from a blast furnace is used to preheat combustion air blown into a blast furnace , was invented and patented by James Beaumont Neilson in 1828 at Wilsontown Ironworks in Scotland. Hot blast was the single most important advance in fuel efficiency of

14248-644: The leading steel making process by the early 20th century. The availability of cheap steel allowed building larger bridges, railroads, skyscrapers, and ships. Other important steel products—also made using the open hearth process—were steel cable , steel rod and sheet steel which enabled large, high-pressure boilers and high-tensile strength steel for machinery which enabled much more powerful engines, gears and axles than were previously possible. With large amounts of steel it became possible to build much more powerful guns and carriages, tanks, armored fighting vehicles and naval ships. The increase in steel production from

14385-450: The liability of these industries or choose to apply a large deductible in order to minimise the potential compensations. Private individuals also occupy land and engage in potentially dangerous activities. For example, a rotten branch may fall from an old tree and injure a pedestrian, and many people ride bicycles and skateboards in public places. The majority of states require motorists to carry insurance and criminalise those who drive without

14522-479: The mid-20th century, as the new machines of the Second Industrial Revolution flooded the legal system with all kinds of previously unimaginable complex factual scenarios. Courts began to allow plaintiffs to recover for emotional distress resulting from negligent physical injuries to not only themselves, but other persons with whom they had a special relationship, like a relative. The first step, then,

14659-520: The modern screw-cutting lathe made interchangeable V-thread machine screws a practical commodity. In 1841, Joseph Whitworth created a design that, through its adoption by many British railway companies, became the world's first national machine tool standard called British Standard Whitworth . During the 1840s through 1860s, this standard was often used in the United States and Canada as well, in addition to myriad intra- and inter-company standards. The importance of machine tools to mass production

14796-406: The naval supply dominance of Boulton & Watt and Maudslay, Son & Field . Penn also introduced the trunk engine for driving screw propellers in vessels of war. HMS  Encounter (1846) and HMS  Arrogant (1848) were the first ships to be fitted with such engines and such was their efficacy that by the time of Penn's death in 1878, the engines had been fitted in 230 ships and were

14933-409: The need to stop to clean them on long sea journeys. The Great Western , built by engineer Isambard Kingdom Brunel , was the longest ship in the world at 236 ft (72 m) with a 250-foot (76 m) keel and was the first to prove that transatlantic steamship services were viable. The ship was constructed mainly from wood, but Brunel added bolts and iron diagonal reinforcements to maintain

15070-513: The new " mauveine ", and commercialized it as the world's first synthetic dye. After the discovery of mauveine, many new aniline dyes appeared (some discovered by Perkin himself), and factories producing them were constructed across Europe. Towards the end of the century, Perkin and other British companies found their research and development efforts increasingly eclipsed by the German chemical industry which became world dominant by 1914. This era saw

15207-619: The onset of the First Industrial Revolution . The increase in mechanization required more metal parts, which were usually made of cast iron or wrought iron —and hand working lacked precision and was a slow and expensive process. One of the first machine tools was John Wilkinson 's boring machine, that bored a precise hole in James Watt 's first steam engine in 1774. Advances in the accuracy of machine tools can be traced to Henry Maudslay and refined by Joseph Whitworth . Standardization of screw threads began with Henry Maudslay around 1800, when

15344-407: The plaintiff may attempt to recover the remaining balance of the judgment by enforcing writs of attachment or execution against the insured's valuable assets. This is where the duty to settle comes in. To discourage the insurer from gambling with the insured's assets in pursuit of the remote possibility of a defense verdict (under which it can avoid having to pay the plaintiff anything at all),

15481-487: The plaintiff simply witnessed the death of a close relative at a distance, and was not within the "zone of danger" where the relative was killed. A 2007 statistical study commissioned by the Court found that Dillon was the most persuasive decision published by the Court between 1940 and 2005; Dillon has been favorably cited and followed by at least twenty reported out-of-state appellate decisions, more than any other California appellate decision. The next step after Dillon

15618-402: The policy period as a result of an act or omission of the insured. This was originally not a problem because it was thought that insureds' tort liability was predictably limited by doctrines like proximate cause and statutes of limitations . In other words, it was thought that no sane plaintiffs' lawyer would sue in 1978 for a tortious act that allegedly caused a covered loss in 1953, because

15755-406: The productivity of railroads. Rail became the dominant form of transport infrastructure throughout the industrialized world, producing a steady decrease in the cost of shipping seen for the rest of the century. The theoretical and practical basis for the harnessing of electric power was laid by the scientist and experimentalist Michael Faraday . Through his research on the magnetic field around

15892-418: The public, visitors, trespassers, sub-contractors, etc. who may be physically injured or whose property may be damaged or both). It varies from state to state as to whether either or both employer's liability insurance and public liability insurance have been made compulsory by law. Regardless of compulsion, however, most organizations include public liability insurance in their insurance portfolio even though

16029-484: The right to recover for NIED to a larger class of plaintiffs. Emotional distress is an intangible condition experienced by most persons, even absent negligence, at some time during their lives. Close relatives suffer serious, even debilitating, emotional reactions to the injury, death, serious illness, and evident suffering of loved ones. These reactions occur regardless of the cause of the loved one's illness, injury, or death. That relatives will have severe emotional distress

16166-425: The risk of dismissal was so obvious. In the 1970s and 1980s, a large number of major toxic tort (primarily involving asbestos and diethylstilbestrol ) and environmental liabilities resulted in numerous judicial decisions and statutes that radically extended the so-called "long tail" of vulnerable policies. Policyholders started to argue that losses began to occur not only at the time of a plaintiff's diagnosis or

16303-406: The size of blast furnaces. The Bessemer process , invented by Sir Henry Bessemer , allowed the mass-production of steel, increasing the scale and speed of production of this vital material, and decreasing the labor requirements. The key principle was the removal of excess carbon and other impurities from pig iron by oxidation with air blown through the molten iron. The oxidation also raises

16440-582: The temperature of the iron mass and keeps it molten. The "acid" Bessemer process had a serious limitation in that it required relatively scarce hematite ore which is low in phosphorus. Sidney Gilchrist Thomas developed a more sophisticated process to eliminate the phosphorus from iron. Collaborating with his cousin, Percy Gilchrist a chemist at the Blaenavon Ironworks , Wales , he patented his process in 1878; Bolckow Vaughan & Co. in Yorkshire

16577-411: The time, chemistry was still in a quite primitive state; it was still a difficult proposition to determine the arrangement of the elements in compounds and chemical industry was still in its infancy. Perkin's accidental discovery was that aniline could be partly transformed into a crude mixture which when extracted with alcohol produced a substance with an intense purple colour. He scaled up production of

16714-550: The tyre's first ever races in Ireland and then England. Dunlop's development of the pneumatic tyre arrived at a crucial time in the development of road transport and commercial production began in late 1890. The modern bicycle was designed by the English engineer Harry John Lawson in 1876, although it was John Kemp Starley who produced the first commercially successful safety bicycle a few years later. Its popularity soon grew, causing

16851-504: The underlying accident first occurred. Claims-made coverage also makes it harder for insureds to switch insurers, as well as to wind up and shut down their operations. It is possible to purchase "tail coverage" for such situations, but only at premiums much higher than for conventional claims-made policies, since the insurer is being asked to re-assume the kind of liabilities which claims-made policies were intended to push to insureds to begin with. Not surprisingly, insureds recognized what

16988-529: The widespread adoption of technological systems such as telegraph and railroad networks, gas and water supply , and sewage systems , which had earlier been limited to a few select cities. The enormous expansion of rail and telegraph lines after 1870 allowed unprecedented movement of people and ideas, which culminated in a new wave of globalization . In the same time period, new technological systems were introduced, most significantly electrical power and telephones. The Second Industrial Revolution continued into

17125-499: Was Robert Forester Mushet at the Darkhill Ironworks , Gloucestershire in 1857. The first of Mushet's steel rails was sent to Derby Midland railway station . The rails were laid at part of the station approach where the iron rails had to be renewed at least every six months, and occasionally every three. Six years later, in 1863, the rail seemed as perfect as ever, although some 700 trains had passed over it daily. This provided

17262-570: Was built by Horseley Ironworks and named the Aaron Manby . It also used an innovative oscillating engine for power. The boat was built at Tipton using temporary bolts, disassembled for transportation to London, and reassembled on the Thames in 1822, this time using permanent rivets. Other technological developments followed, including the invention of the surface condenser , which allowed boilers to run on purified water rather than salt water, eliminating

17399-445: Was developed in the 1890s and soon began to be used in the electrification of industry. Household electrification did not become common until the 1920s, and then only in cities. Fluorescent lighting was commercially introduced at the 1939 World's Fair . Electrification also allowed the inexpensive production of electro-chemicals , such as aluminium, chlorine, sodium hydroxide, and magnesium. The use of machine tools began with

17536-504: Was mounted on top of the hull rather than inside it. The vulcanization of rubber, by American Charles Goodyear and Englishman Thomas Hancock in the 1840s paved the way for a growing rubber industry, especially the manufacture of rubber tyres John Boyd Dunlop developed the first practical pneumatic tyre in 1887 in South Belfast. Willie Hume demonstrated the supremacy of Dunlop's newly invented pneumatic tyres in 1889, winning

17673-497: Was on general liability, including USD 12 billion for Errors and Omissions (E&O) and USD 5.4 billion for Directors and Officers (D&O). US businesses spent another USD 13 billion on the liability portion of commercial multi-peril policies, USD 9.5 billion for medical malpractice and USD 3 billion for product liability covers. The UK is the world’s second largest market for liability insurance, with USD 9.9 billion of liability premiums in 2013. The largest sub-line of business

17810-520: Was opened at Holborn Viaduct in London in 1882 and later at Pearl Street Station in New York City. The first modern power station in the world was built by the English electrical engineer Sebastian de Ferranti at Deptford . Built on an unprecedented scale and pioneering the use of high voltage (10,000V) alternating current , it generated 800 kilowatts and supplied central London. On its completion in 1891 it supplied high-voltage AC power that

17947-554: Was the Siemens–Martin process . Sir Charles William Siemens developed his regenerative furnace in the 1850s, for which he claimed in 1857 to able to recover enough heat to save 70–80% of the fuel. The furnace operated at a high temperature by using regenerative preheating of fuel and air for combustion . Through this method, an open-hearth furnace can reach temperatures high enough to melt steel, but Siemens did not initially use it in that manner. French engineer Pierre-Émile Martin

18084-602: Was the first company to use his patented process. His process was especially valuable on the continent of Europe, where the proportion of phosphoric iron was much greater than in England, and both in Belgium and in Germany the name of the inventor became more widely known than in his own country. In America, although non-phosphoric iron largely predominated, an immense interest was taken in the invention. The next great advance in steel making

18221-576: Was the first to take out a license for the Siemens furnace and apply it to the production of steel in 1865. The Siemens–Martin process complemented rather than replaced the Bessemer process . Its main advantages were that it did not expose the steel to excessive nitrogen (which would cause the steel to become brittle), it was easier to control, and that it permitted the melting and refining of large amounts of scrap steel, lowering steel production costs and recycling an otherwise troublesome waste material. It became

18358-519: Was then "stepped down" with transformers for consumer use on each street. Electrification allowed the final major developments in manufacturing methods of the Second Industrial Revolution, namely the assembly line and mass production . Electrification was called "the most important engineering achievement of the 20th century" by the National Academy of Engineering . Electric lighting in factories greatly improved working conditions, eliminating

18495-431: Was to make optional the element of another person (so that the injury could be to anything where it would be reasonably foreseeable that such injury would cause some person emotional distress). The first such case was Rodrigues v. State , in which the Supreme Court of Hawaii held that plaintiffs could recover for negligent infliction of emotional distress as a result of negligently caused flood damage to their home. This

18632-418: Was to remove the requirement of physical injury to the actual plaintiff while keeping the requirement of physical injury to someone. In the 1968 landmark decision of Dillon v. Legg , the Supreme Court of California was the first court to allow recovery for emotional distress alone – even in the absence of any physical injury to the plaintiff – in the particular situation where

18769-475: Was used for evaporation of the brine. Chinese well drilling technology was introduced to Europe in 1828. Although there were many efforts in the mid-19th century to drill for oil, Edwin Drake 's 1859 well near Titusville, Pennsylvania, is considered the first "modern oil well". Drake's well touched off a major boom in oil production in the United States. Drake learned of cable tool drilling from Chinese laborers in

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