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Third part liability insurance
21.03.2014r.
Sources of civil liability
:
-
Torts (a civil wrong that violates the rights of another)
-
Breach of contracts (misperformance or non-performance)
Crime liability – legal wrong against society – punishable by fines,
imprisonment, or death (criminal law)
Social responsibility - responsibility for the impact of business activities on the
environment, consumers, employees, communities,
Intentional torts
•
can arise from an intentional act or omission
•
that result in harm or injury to another person or damage to person’s property
Ac. assault, fraud, slander, murder..
l
iability insurance generally provides no protection for the insured against liability arising out of
intentional torts
Negligence
= unintentional tort
negligence is the lack of reasonable care that is required to protect others from the unreasonable
chance of harm
or
– failure to exercise the standard of care required by law to protect others from harm
(standard depends on the age, knowledge, court interpretations over time, judgment of the claimant…)
/property owning, driving a car, having children or animals, running business, ./
Absolute liability
•
is imposed by law on those participating in certain activities that are considered
especially hazardous.
•
Individuals involved in such operations can be held liable for the damages of
another, even though the individual was not negligent.
•
Absolute liability is most frequently applied to activities involving
– Dangerous materials
– Hazardous operations
– Dangerous animals
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Typical options of LI products (product names may differ depending on country and company):
Personal liability insurance – usually developed for private clients, providing the insured
with protection against lawsuits from third parties arising from the ownership of the
residence, occured during physical activity of person insured, caused by insured’s children,
pets etc
(Commercial) general liability insurance - protection for insureds running their business or
being business clients; coverage against liability claims for bodily injury (BI) and property
damage (PD) arising out of their activity (operations, products) [US typical: it includes also
advertising and personal injury (PI) liability]; It can include also product liability insurance
(clause: products-completed operations insurance).
Excess liability insurance/commercial umbrella insurance – additional coverage if the
coverage provided by CGLI is not enought (also because of limit of indemnity)
Professional Liability (PLI) / Professional Indemnity Insurance (PII) – products developed for
some professions, providing liability coverage from negligence, misrepresentation, violation
of
good
faith
and
fair
dealing,
and
inaccurate
advice
as
a
professional;
(Malpractice Liability, Directors and Officers Liability – D&O, or Error's and Omissions
Liability – E&O)
Product liability insurance – coverage against claims related to the manufacture or sale of
products, covering liability for losses or injuries to a buyer, user or other third party being a
result of defect, malfunction of the product, a defective design or a failure to warn.
Main features:
a coverage providing protection againts risks of liability
depending on the insurance scope and policy type: a
protection against damage caused by negligence as well as
contractual liability
liability insurance does not protect against liability resulting
from crimes committed by the insured
typical „damage”causes: malpractice, injury or negligence
no subrogation applies (exclusions possible)!
relation between insured, policyholder and insurer is typical
for non-life products
different scope of coverage
even in the same type of
product
INSURED
Party responsible
for damage or injury
INJURED PARTY
Liability
payment
INSURER
TPL ins.
Claim (actio directa)
premium
compensation
Sum guarantee/ sum insured/ limit of indemnity (depending on
country and product ) - in general, a limit of financial obligation of
an insurance company; it can be defined as:
A) a limit for all insurance event in insurance period (aka „Any One
Year (AOY) limit”)
B) a limit for a single event in the insurance period (no „all events
limit”) (aka „Any One Accident (AOA) limit”)
C) a limit for a single event and for all insurance events in the
insurance period (simultanously)
D) a lower limit for a single event and a higher limit for all insurance
events in the insurance period (as defined in the same policy)
E) a limit for personal damage and a limit for property damage for a
single event (separately, in the same policy)
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Coverage trigger (timing trigger) types:
act committed / occurence – insurer’s responsibility only if insurance event
causing a damage occurs within the insurance period (claim reporting,
claim manifestation can occur after the insurance period)
loss occurence - insurer’s responsibility only if a loss caused by insurance
event occurs within the insurance period (claim reporting, claim
manifestation can occur after the insurance period)
loss manifestation - insurer’s responsibility only if a loss caused by
insurance event „activates” within the insurance period (claim reporting,
loss occurence can occur after/before the insurance period)
claims made (policy) - insurer’s responsibility only if a claim related to
insurance event is reported within the insurance period (loss occurence can
occur before insurance period)*
Coverages
Most liability policies agree to pay on behalf of the insured all sums for which
the insured becomes legally liable to pay as damages:
-
bodily injury (BI) means injury, sickness, disease, and death arising out of
injury, sickness, or disease
-
property damage (PD) means damage to or destruction of property,
including loss of use of the property
-
personal injury (PI), - covered in some policies - slander, libel, false arrest,
and invasion of privacy / infringement of personal rights/.
(In the insurance business, "bodily injury" and "personal injury" have
different meanings and are not used interchangeably.)