“Legally obligated,” “legally responsible,” “legally must pay,” and “legally liable” are all insurance policy terminology referring to the same concept – legal liability. Legal liability is liability imposed by the courts through common law or by statute on any person or entity responsible for the financial injury or damage suffered by another person, group, or entity.
Legal obligations, or legal liability, can arise from intentional acts, unintentional acts, or contracts. However, insurance is not necessarily available to cover the cost of failing to fulfill every possible legal obligation that can be placed on an individual or entity. Remember, insurance applies (or is available) only when the risk of loss, to include being held legally liable, meets the seven qualification of insurable risk. To be insurable the risk must:
- Cause financial loss;
- Be static;
- Be particular/individual;
- Be a pure risk;
- Have a large number of homogeneous exposures;
- Result in a loss that is definite in time and place; and
- Result in an accidental loss.
Applying the qualifications of an insurable risk to the full range of possible legal obligations proves that insurance for the financial consequences of legal liability is somewhat limited in its scope. Although individuals and entities regularly engage in activities that expose them to legal liability or obligation, insurance is available only for specific categories of “wrongs.”
Can an augmented reality game player be held legally liable for any injury or damage caused while playing the game? The answer depends on the facts surrounding the injury or damage.
How Many Ways Can a Person be “Wrong?”
There are three broad categories or classifications of “wrongs” an individual or entity can commit: 1) public wrongs; 2) private wrongs; and 3) contractual wrongs. Public wrongs are more commonly referred to as crimes, private wrongs are known as torts, and contractual wrongs generally lead to charges of breach of contract. Public and private wrongs are detailed in the following paragraphs, but contractual wrongs are outside the scope of this article.
Public Wrong / Crime
Crime, from the Latin term “crimen,” means “I decide.” In essence, the individual makes a conscious decision to ignore the law. The conscious decision to ignore the law indicates intent, meaning that the act is not accidental and generally not insurable when compared to the seven qualifying factors of an insurable risk – although there are exceptions to this rule.
Society as a whole is considered to be harmed by a crime, even if the harm was experienced by only one person or entity. Crimes are viewed as deviant, anti-social behavior, thus the legal system takes it upon itself to protect society.
Statutes define the acts that constitute crimes and the governmental entity exercising jurisdictional authority (the federal government, state government, or the local government) prosecutes the wrongdoer (criminal) regardless of the injured party’s desire to “press charges” or pursue justice. Punishment can be by fine, imprisonment, or even death (based on the act and the jurisdiction).
“Crimes” fall into one of three categories; the act may be a property crime, a public order crime, and/or a violent crime. Examples of each include (not a complete list):
- Property crimes: Burglary, robbery, theft, shoplifting, vandalism, trespassing, and arson.
- Public order crimes: Drug use, prostitution, rioting, and driving under the influence (DUI).
- Violent crimes: Murder, rape, robbery, aggravated assault, simple assault, abuse, and kidnapping.
Because crimes are viewed as anti-social behavior, criminals are not considered reasonable and prudent individuals. Legal liability, as presented and intended in insurance policies, requires negligence be proven; negligence is the failure to act as a reasonable and prudent person would act in a similar situation. Without negligence there cannot be legal liability, negligence requires prudency, and criminals are not prudent, thus there is no insurance coverage available for criminal acts.
However, there are always exceptions in insurance. Some “criminal” activity is covered by insurance depending on who the named insured is and who commits the criminal act.
Augmented reality game players may be guilty of trespass, thus there may not be any coverage for injury or damage caused during the committing of the property crime.
Private Wrongs / Torts
Every “person” in society owes some level of duty to every other “person.” Any infringement of another “person’s” rights can be considered a private wrong or tort.
“Person,” as used in this article, includes “natural persons” and “legal persons.” A “natural person” is a flesh and blood human. A “legal person,” considered a legal fiction, is created by statute and “born” with the filing of articles of incorporation or other such documents (a.k.a. Juridical Person).
A “tort” is: “A wrongful act or omission arising in the course of social or business relationships, other than contracts, which violates a person’s legally protected right, and for which the law provides a remedy by the enforcement of a particular action of payment of specified damages.” The perpetrator (or wrongdoer) of a tort is known as the tortfeasor, the harmed party is the victim, and the act is known as the tortuous act.
Notice, a tort involves the violation of a person’s rights, not the rights of society as a whole. A tortuous act is not generally considered a deviant or anti-social behavior like a crime, thus the government does not take upon itself the responsibility of trying the at-fault party in court – as there is no benefit to society; that duty/decision is left to the person who suffered harm as a result of the tortfeasor’s infringement. Torts are civil actions between persons.
Most torts (or individual rights) are created by common law through precedent (stare decisis). However, some torts are created by or result from the presence of a specific statute. When created by or resulting from a statute, the offending party is guilty of “negligence per se.”
Torts are divisible into three broad categories or classifications: 1) intentional torts; 2) negligence torts; and 3) strict liability torts. The central point for all three categories is intent; what was the tortfeasor’s intent prior to the injury or damage?
Intentional torts are so named because there is provable intent to cause injury on the part of the tortfeasor. Negligence torts are often referred to as “unintentional torts” as there is no real proof that the tortfeasor intended to cause injury or damage, only that injury or damage occurred. Strict liability torts impose liability regardless of the tortfeasor’s intent, the fact that the injury or damage occurred is sufficient.
Insurance protection also applies or is excluded based on tortfeasor intent. Where there is a readily apparent intent by the wrongdoer to cause injury or damage, or such injury or damage is (or should be) reasonably expected by the wrong doer, most personal and business liability policies specifically exclude the financial liability placed on the tortfeasor for the act. Conversely, where there is no apparent intent on the part of the tortfeasor to cause injury or damage, and/or the tortfeasor could not readily anticipate an injury or damage, but such does occur, liability coverage is generally available to cover the legal liability cost resulting from such infringement on the rights of another.
Injury or damage caused by an augmented reality game player not paying attention to her surroundings may be considered an unintentional tort. Again, legal liability for and insurance protection for injury or damage caused by the player depends on the facts of the situation.
How Does a “Person” Become Legally Liable?
Too often “legal liability” and “negligence” are incorrectly considered and used interchangeable. Legal liability has a much higher threshold than negligence.
Legal liability and negligence are not synonymous; a person can be negligent without being legally liable, but he cannot be legally liable unless he is first negligent (except in strict liability where negligence is presumed). But in some specific situations a person can be held legally liable even though they were not negligent; when this is the case, the person is considered “vicariously liable” for the negligent actions of another. An augmented reality game player might be negligent but not legally liable. Likewise, someone else could be held responsible for the actions of the player.
So with this in mind, how does a person become legally liable for injury or damage? Three tests must be satisfied:
- The person (remember, this includes natural and legal persons) must be found guilty of negligent conduct. The two parts of negligent conduct are:
- There was a duty to act or not act; and
- That duty was breached;
- The injured party must suffer actual, quantifiable loss or damage; and
- The negligent conduct must be the actual cause of the injury or damage.
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