Canadian Accredited Insurance Broker (CAIB) Three Practice Exam

Which principle is central to the concept of Strict Liability?

1. Only intentional damage can lead to liability

2. All activities carry equal risk of liability

3. Certain hazardous activities yield automatic liability

4. Liability can be avoided through insurance

The correct answer is: Certain hazardous activities yield automatic liability

The principle central to the concept of Strict Liability is that certain hazardous activities yield automatic liability. Strict liability holds individuals or companies responsible for the consequences of their actions regardless of intent or negligence. This means that if someone engages in activities deemed inherently dangerous, such as using explosives or keeping wild animals, they can be held liable for any resulting harm, even if they took all possible precautions. This approach encourages a high standard of care for particularly dangerous activities and ensures that those who engage in such activities assume responsibility for any harm that occurs. The other choices do not accurately reflect the principle of strict liability. For instance, suggesting that only intentional damage can lead to liability contradicts the very essence of strict liability, which does not require intent. The notion that all activities carry equal risk of liability oversimplifies the distinction between ordinary and hazardous activities and does not align with the principle that certain risks inherently carry stricter accountability. Lastly, the idea that liability can be avoided through insurance is misleading in the context of strict liability; while insurance can cover the financial implications of liability, it does not negate the fact that liability exists for hazardous activities.