South Carolina Personal Lines Practice Exam

How is negligence defined in the context of insurance?

1. Intentional harm

2. Failure to use ordinary or reasonable care

3. Accidental harm

4. Fraudulent action

The correct answer is: Failure to use ordinary or reasonable care

Negligence in the context of insurance is defined as the failure to use ordinary or reasonable care, which means not taking the appropriate precautions or actions that a reasonable person would take in similar circumstances. This concept is foundational in personal lines insurance as it often relates to liability coverage. When a person causes harm to another party due to careless actions or omissions, they may be held liable under negligence. For instance, if a property owner fails to fix a broken step and someone is injured as a result, the owner could be held negligent because they did not take reasonable care to ensure safety on their property. In terms of insurance, if an injured party brings a claim against the property owner, their liability policy may cover damages incurred as a result of this negligence. Understanding this definition is critical for evaluating claims and determining potential coverage under various policies. The other options refer to concepts that do not align with negligence, such as intentional harm, which involves a deliberate action leading to injury, or fraudulent actions, which imply dishonesty or deceit rather than a failure to take reasonable care. Accidental harm alone does not encompass the legal concept of negligence, since it may occur without any breach of duty or failure to act responsibly.