Liability insurance covers legal and compensation costs for loss, damage or injury to a third party. It is meant for professionals, business owners, manufacturers, and corporates. It includes product liability insurance, public liability insurance, professional indemnity insurance, director’s and officer’s liability insurance, cyber-crime liability insurance, commercial general liability etc.
Types of Policies
Product Liability Insurance
Covers damage arising out of a faulty product that harms someone’s life or property, and for which the manufacturer, supplier or vendor is legally liable. This policy covers all costs, including defence costs, that the insured becomes legally liable to pay for
- Accidental death/bodily injury or disease to any third party
- Accidental damage to property belonging to third party
This is applicable when the damage was caused by a defect in the product manufactured by the insured, and specifically mentioned in the policy, after the product left the insured’s premises.
Products like pharmaceuticals, automobile parts, and aviation parts can be covered under this.
Public Liability Insurance
Covers damage arising out of death, bodily injury or damage to property of a third party in the insured’s premises.
For more comprehensive protection, the cover can be extended for legal exposures arising out of sudden and accidental pollution, act of god perils, transportation of hazardous substances and more.
Standard Exclusions common to Product and Public Liability:
- Deliberate non-compliance of any statutory provision
- Pure financial loss
- Fines and penalties
- War and kindred risks, nuclear risks
- Contractual Liability
Professional Indemnity Insurance
Compensates legal costs of damage to another party as a result of errors or omissions in conduct of business. The policy covers cost of defense as well as out of court settlements that may take place. It is useful for individuals and companies engaged in professional services such as chartered accountancy, architecture, civil engineering firms, law firms, advertising agencies etc.
- Any act committed in violation of any law
- Services rendered while under the influence of narcotics or intoxicants
- Personal injuries such as libel
- Any dishonest, fraudulent, criminal or malicious act or omission
- Liabilities arising out of pollution and/or contamination
Directors and Officers Liability Insurance
Protects the key people in an organisation such as directors, officers and employees against claims made by various parties such as shareholders, investors, employees etc., for alleged wrongful acts of the company’s directors or officers.
It covers legal costs as well as compensation for any loss or damage caused to third parties. Generally, directors and officers of all types of companies such as listed companies and private limited companies are covered under this insurance. It, however, does not cover criminal acts by the directors or officers of the organisation.
- Fines, penalties and multiple damages
- Bodily injury or property damage claims, absolute professional Indemnity claims, insolvency
- Intentional wrongful acts/fraud/criminal wrongful act
Cyber insurance is an insurance product used to protect businesses and individual users from Internet-based risks, and more generally from risks relating to information technology infrastructure and activities. It indemnifies against loss of personal information, loss of corporate information, loss due to alleged breach of duty by the outsourcer, network security.
- Losses arising out of contractual liability
- Losses arising out of criminal, dishonest or fraudulent acts by the insured
- Losses arising out of any infringement of patents and trade secrets
Crime insurance indemnifies the insured against any loss sustained due to the fraud or dishonesty committed by any employee (acting alone or in collusion with others); or a fraudulent act committed by any other person which is committed with the principal intent to cause the insured to sustain such loss and is first discovered by the insured during the policy period or the discovery period.
- Losses arising out of consequential loss, credit risks
- Loss resulting directly or indirectly from any act or series of acts committed by any director or partner of the insured, whether acting alone or in collusion
- Nuclear risks
Please refer to the policy document for detailed scope of cover and list of exclusions and other terms and conditions under the policy.
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