Liability Insurance learning course

The objective of this course is to improve understanding about Liability products and to increase business in this line of business. This LOB is expected to grow manifold in coming years and this course will help you capitalize on this profitable business opportunity.  

Development of Civil Liability and Insurance.

Development of Civil liability

Originally everybody lived by the principle – “you pay for your own losses.” 

However with the passage of time the notion of fault got incorporated in civil law, which meant that if you are responsible for the damages / injures you have to pay the monetary compensation. 

But this required the establishment of“fault” in the court of law - a difficult task indeed. 

The principle that “for every wrong there must be redress in the form of damage/ claim” has now changed to “for every injury there must be redress in the form of damage/ claim.” 

With this change has come the concept of “strict or absolute liability”which means that mere existence / operation of an activity constitute the cause triggering liability - the only requirement being a causal link between the activity and the loss event. (No fault provision)

OWN cost shifted to Others cost (Fault) shifted to Others cost (No Fault) 


Strict and Absolute liability

In strict liability situations, although the third party/ Victim does not have to prove fault, the defendant can raise a defense of absence of fault, especially in cases of product liability, where the defense may argue that the defect was the result of the third party’s actions and not of the product, that is, no inference of defect should be drawn solely because an accident occurs.

Exceptions available to defend strict liability claims include:

i)Victim’s own mistake

ii) Victim’s consent

iii) Natural disasters

iv) Third Party’s mistake

 v) Part of a statutory duty

Absolute liability (Public Liability Insurance Act 1991)is strict liability without any exception. This liability standard has been laid down by the Indian Supreme Court inM.C. Mehta v. Union of India (Oleum Gas Leak Case 1985).

Legal Liability Exposure under Civil Law

A tort is a wrongful act or omission-causing harm to others(negligence) or invading other’s protected rights (nuisance)

If someone’s acts of negligence or nuisance cause harms to others,the law provides for remedy to the victim through an action/ claim for damages or compensation. This is the legal liability exposure.

Each and everyone in the society do have such legal liability exposure and the degree of exposures varies with the nature and volume of social or economic activity of the individual. An individual or organization can transfer such liability exposure(only civil) to an insurance company through an appropriate liability policy.

Sources of Civil Liability

Sources of Civil Liability

Common law – based on the doctrine of binding precedent – Judge made law. 

Legislation – most direct and efficient source of law. 

Contract – is an agreement giving rise to obligations which are enforced or recognized by law. 

Tort – is a civil wrong, law of tort imposes obligations on individuals or groups of individuals, in absence of contractual or other legal relationship. 

• Tort imposes liabilities whereas entering into a contract is voluntary.

Tort liability - actionable wrong

• Not all actions (or failure to take action) which cause injury or damage give the right to a claim in tort. E.g. there is no duty to save a person drowning, even if one can swim well. 

• Some torts are Negligence, Nuisance, Breach of statutory duty, Strict liabilities, Defamation, Libel & slander. 

• The law of tort is concerned with the distribution of loss. If somebody  is injured or their property damaged, and if another party has caused the injury or damage, the monetary value of it might be transferred to that party who is then liable. (actionable wrong) 

• The victim must show good reason why their loss should be transferred to the other party i.e. monetary compensation be awarded. 

Tort of Negligence

• Fault normally consists of failing to comply with a general or specific duty set up by the law. 

• Negligence as a tort is a breach of a legal duty to take care which results in damage, undesired by the       defendant, to the claimant. 

• The defendants  conduct which be judged by reference to that of a reasonable man. 

• To succeed in an action in Negligence, Victim must prove that - 

•The defendant owes a duty of care to the claimant 

•The defendant is in breach of that duty 

•The breach has caused damage or loss to the claimant

Classification of damages (Heads)

Court after considering all relevant facts may award damages under following heads - 

• General damages – un-liquidated damages – those which cannot be accurately assessed mathematically e.g. pain and suffering

• Special damages – liquidated damages –those loses which are known and can be proven e.g. damage to  property and past loss of earnings

• Nominal damages – not intended to compensate and are usually small, awarded as a token of claimant’s legal rights 

• Exemplary or punitive damages – awarded in addition to real damages to express courts views that the defendants conduct is deplorable or outrageous. These damages are punitive and not compensatory.       .

Broad classification of Liability Insurance products

Casualty 

(cover for Bodily Injury/ Property Damage)

Public Liability Insurance 

Product Liability Insurance 

Commercial General Liability 

& more  

Financial 

(cover for financial loss)

Professional Indemnity Insurance 

Error & Omissions Insurance 

Directors & Officers Insurance 

& more

Liability Insurance policy terminology

Retroactive date - 

It is the date when the first policy issued commences and will continue to be the retroactive date for                 subsequent policies if renewed without break. (in Claims made form)

Policy period - 

It is the one year policy period as depicted on the face of the policy.

Period of insurance -

It means the period commencing from the retroactive date and continues, if the policies are renewed without break, till the expiry date in the last policy. (in Claims made form)


Liability Insurance policy terminology

Extended Claim Reporting Clause -

Maximum __ days  from the date of  expiry or non renewal for reporting of claims which occurred in period of insurance; such claims shall be dealt with as if they were made on last day of expiring policy period, provided no other insurance is in force covering the same risk/ event. (in Claims made form)

Notifications Extension Clause - 

Insured may notify in writing during policy period, any specific event or circumstance which may give rise to a claim in future. Acceptance of such notice means that the insurer will deal with such claims as if made during the policy period. (in Claims made form)

Liability Insurance policy terminology

‘Injury’

 means bodily injury, illness or disease of or to any person. These are known as personal injuries. However policy excludes liability arising out of personal injuries s/as libel, slander, false arrest, wrongful detention etc and mental injury, anguish, or ensuing shock.

‘Damage’

means actual and/ or physical damage to tangible property. However policy excludes liability arising out of infringement of plans, copyrights, patent, trade name, trademark, registered design.

Liability Insurance policy terminology

‘Accident’

 means fortuitous event or circumstance which is sudden, unexpected and unintentional including resultant continuous intermittent or repeated exposure arising out of the same fortuitous event or circumstance.

‘Product’

means tangible property after it has left the custody or control of the insured, which has been designed, formulated, manufactured, constructed, installed, sold, supplied, treated, serviced, altered or repaired, by or on behalf of the insured,  but shall not mean food and beverage supplied by or on behalf of the insured, primarily to insured’s employees as staff benefit.

Liability Insurance policy terminology

‘Accident’ 

means fortuitous event or circumstance which is sudden, unexpected and unintentional including resultant continuous intermittent or repeated exposure arising out of the same fortuitous event or circumstance.

‘Pollution’ 

means pollution or contamination of the atmosphere or  of any water, land, or other tangible property

In case of e.g. pollution accident: The date of first medical consultation by the claimant is deemed to be the date of injury and the date when damage became evident to the claimant is deemed to be date of damage.

 

Liability Insurance policy terminology

Compensation award

the Company will indemnify the Insured against  their legal liability to pay compensation including claimant’s costs, fees and expenses anywhere in India, in accordance with Indian Law.

Defence Costs

means the expenses incurred by or on behalf of the Insured or the Company in the investigation or settlement or defense of a Claim and shall include legal costs and disbursements.

Liability Insurance policy terminology

Compulsory Excess

The Insured shall bear a Compulsory Excess of ___ % of the limit of indemnity per any one accident subject to maximum of Rs. ______/-. This shall be applicable to both (a) death/bodily injury and (b) property damage, inclusive of defence costs arising out  of any one accident. 

‘Premises’ 

shall be deemed to include pipelines running outside the premises for discharge of treated effluents at disposal point situated within a distance of one kilometer from the premises

Liability Insurance policy terminology

Cross Liability 

Each person or party indemnified is separately indemnified in respect of  claims made against any of them by any other person or party (other than  the named Insured) subject to Company’s total liability not exceeding the limits of indemnity stated in the Policy.

Indemnity to Others 

Indemnity provided extends to Officials of  the insured in their business capacity or in private capacity             arising  out of temporary engagement with insured’s employees and officers, committees and its members  in their respective capacities. 

Liability Insurance policy terminology

In relation to the claims, to find out whether insurance coverage in a particular case applies or not, there are mainly two types of policy wordings.

1) Occurrence basis: The damage / injury must occur during the policy period. Claim may occur after expiry also. e.g. Motor Third Party Liability  or Workmen's Compensation policy

2) Claims made basis: the claim is made during the policy period irrespective of when the negligence occurred. e.g. Public Liability policy 

Market Agreement in PUBLIC LIABILITY (Non-Industrial Risks) Insurance

Policy was made available in India through a Market agreement in December 1, 1991

• This Agreement applies to non-industrial risks such as Hotels, Motels, Club Houses, Restaurant, Boarding and Lodging Houses, Flight Kitchens, Cinema Halls, Auditoriums, Theatres, Public Halls, Pandals, Open Air Theatres, Residential Premises, Offices/ Administrative Premises, Medical Establishments, Institutions, Airport Premises (other than aviation liabilities), Schools/ Educational Institutions, Libraries, Exhibitions, Fairs and Fetes, Stadiums and Pandals, Permanent Amusement Parks, Film Studios - Indoor & Outdoor, Zoos, Shops, and similar other non-industrial risks. 

• It shall not be permissible to issue any Public Liability Insurance Policy with unlimited liability.  

• The ratio of limit of indemnity any one accident to any one year shall not exceed 1:4. 

 •Extension sought under the main policy shall not have indemnity limit in excess of the main cover.

Market Agreement in PUBLIC LIABILITY (Non-Industrial Risks) Insurance

• The rates of premium under this Agreement are annual rates. Full premium under the policy shall be paid at inception. 

• It is not permissible to accept premium in installments. 

• RATING  - The various covers falling within the scope of this Market agreement have rating structure depending on two main components viz., Limit of indemnity opted under the policies and estimated annual turnover

• Policies issued under this Agreement shall not include cover for Pollution risks unless otherwise specifically included by endorsement prescribed here under and additional premium collected.

• It shall be permissible to insure various units situated at different locations under single limits of indemnity per Any One Accident/Any One Policy period provided appropriate premium is paid. 

•Any proposals outside the scope of the Market Agreement may be considered by the Companies on merits.

How does Absolute liability differ from Strict liability?

  • No defense available
  • Defense is available
  • Causal link is not required

What are the two main components of rating structure in public liability insurance?

  • Limit of Indemnity and Estimated Turnover
  • Limit of Indemnity and Paid up capital
  • Limit of Indemnity and Moral hazard

What is meant by duty of care in civil liability?

  • legal duty owed by defendant towards the victim
  • Not to knowingly cause physical harm to anyone
  • Not to behave nonsensically

When does Extended claim reporting clause help the Insured?

  • In event of non renewal or cancellation
  • In event of shifting policy to other insurer
  • In event of anticipated claim due to some accident e.g. collapse of wall

Do you find Retroactive date in policies underwritten on Occurrence basis?

  • No
  • Yes
  • Will have to check

Public Liability (Non Industrial Risks) Insurance Policy

Operative clause– 

 … subject to the terms exceptions and conditions contained in the policy form the Company will indemnify the Insured against their legal liability (other than liability under the Public Liability Insurance Act, 1991 or any other Statute based on the doctrine of "No Fault liability") to pay compensation including Claimant's costs, fees and expenses anywhere in India, in accordance with Indian Law.

Indemnity –

 • The indemnity only applies to claims arising out of accidents occurring in the insured premises during the period of insurance first made in writing against the Insured during the policy period and the Insured is indemnified in accordance with the Operative Clause for and/or arising out of injury and/or Damage but only against claims arising out of or in connection with the business specified in the Schedule and not against claims arising out of or in connection with : 

      (a) Pollution howsoever caused unless specifically covered (b) Any product

Public Liability (Non Industrial Risks) Insurance Policy

Add on Cover/Extensions

- Food & Beverage’s 

- Valet Parking

- Valuables under Care, Custody in Control

- Other Facilities such as health clubs, beauty parlors shop, swimming pools, indoor and outdoor sports.

- Aqua Sports Facilities

- For Inclusion of skydiving, skiing and hang gliding

 - Act of God Perils

- Terrorism 

- Lift/Elevator Liability

- Accidental Pollution 

Note: above extensions are subject to underwriter’s approvals.

Public Liability (Non Industrial risks) Policy - Exclusions / Exceptions

1 assumed by the Insured by agreement and which would not have attached in the absence of such agreement. 

2 arising out of earthquake, volcanic eruption, flood, storm, tempest, typhoon, hurricane, tornado, cyclone or other similar convulsions of nature and atmospheric disturbance     

3 arising out of deliberate, wilful or intentional non-compliance of any Statutory provision.  

4 arising out of loss of pure financial nature such as loss of goodwill, loss of market etc.,         

5 (a) arising out of all personal injuries such as libel, slander, false arrest, wrongful eviction, wrongful detention, defamation etc., and mental injury, anguish, or shock resulting therefrom. (b) infringement of plans, copyright, patent, trade name, trade mark, registered design.

Public Liability (Non Industrial risks) Policy - Exclusions / Exceptions

6. arising out of fines, penalties, punitive or exemplary damages or any other damages resulting from the multiplication of compensatory damages.

7. war risks

8. nuclear risks

9. liability for claims arising out of: the ownership, possession of, use by or on behalf of the Insured of any motor vehicle of trailer for which compulsory insurance is required by legislation.

10. transportation of materials and/or hazardous/dangerous substances outside insured's premises unless specifically covered.

11. Injury and/or damage occurring prior to the Retroactive Date in the Schedule

Public Liability (Non Industrial risks) Policy - Exclusions / Exceptions

12 damage to property owned, leased or hired or under hire purchase or on loan to the Insured or otherwise in the Insured's care custody or control other than                                                                         

(a) premises (or the contents thereof) temporarily occupied by the Insured for work thereon or other property temporarily in the Insured's possession for work thereon (but no indemnity is granted for damage to that part of the property on which the Insured is working and which arises out of such work).                           (b) employees' and visitors' clothing and personal effects.                                                                                                       (c) premises tenanted by the Insured to the extent that the Insured would be held legally liable in the absence of any specific agreement.                                                                                                                 

Public Liability (Non Industrial risks) Policy - Conditions

1 Immediate intimation (reasonably practicable)

2 No admission offer promise or payment shall be made or given by or on behalf of the Insured without the written consent of the Company.

3 Right to defend. 

4 The Company may at any time pay to the Insured in connection with any claim or series of claims under this policy to which an Indemnity Limit applies the amount of such Limit (after deduction of any sums already paid) or any lesser amount for which such claims can be settled and upon such payment being made the Company shall relinquish the conduct and control of and be under no further liability in connection with such claims.

5 Contribution clause (rateable proportion in case of multiple policies).

Refer policy form for details. 

Public Liability (Non Industrial risks) Policy - Non preferred risks

1.Amusement Park/Game Zone/Outdoor Sports Activities 

2.Giving coverage for sports activities for School/Colleges/Education institutes.

3.Water Parks/Bungee Jumping/Paragliding. 

4.Kids Care Take (i.e Euro Kids), only plain public liability cover to given subject to approval from HO on case to case basis. 

5.Events Cover like Stunts/Fireworks & Hazardous activities.

6.Shooting location at Railway/Aviation/Offshore Properties. 

7.Animal Zoo & Circus 8.Covering Railway/Aviation (office risk are acceptable)

Public Liability (Industrial risks) Insurance Policy

To whom we can offer PL-Industrial Policy?

- Manufacturer Units

- Plants/Factories (with multiple locations)

- Storage Risk viz - Warehouse, Godowns, Depots 

 -Tanks farms 

Can we consider that for Liability Insurance, Section 3 occupancies (Fire Tariff) are Non Industrial whereas occupancies under Section 4,5,6,7 (Fire Tariff) are Industrial risks?

Public Liability (Industrial risks) Insurance Policy

Operative clause (same as non industrial)– 

 … subject to the terms exceptions and conditions contained in the policy form the Company will indemnify the Insured against their legal liability (other than liability under the Public Liability Insurance Act, 1991 or any other Statute based on the doctrine of "No Fault liability") to pay compensation including Claimant's costs, fees and expenses anywhere in India, in accordance with Indian Law. 

Indemnity – 

 •The indemnity only applies to claims arising out of accidents occurring in the insured premises during the period of insurance first made in writing against the Insured during the policy period and the Insured is indemnified in accordance with the Operative Clause for and/or arising out of injury and/or Damage but only against claims arising out of or in connection with the business specified in the Schedule and not against claims arising out of or in connection with : 

      (a) Pollution howsoever caused unless specifically covered (b) Any product

Public Liability (Industrial risks) Policy - Extensions

Add on Cover/Extensions (premiums are Indicative)

1. Carriage of Effluents (Outside the premises)- premium loading 5-10% depending on distance 

2. Accidental Pollution coverage –  premium loading 10- 50% depending on risk group 

2a. Reasonable cost of removing, nullifying, cleaning up, seeping of polluting substances is also covered. 

3. Earthquake risk- premium loading 2.5- 10% depending on EQ zone 

4. Transportation of hazardous goods (Separate limits)- 50% of (Premium as per Policy rate; loaded for EQ& Pollution ) 

5. Technical collaborators (Cause of action must arise and liability established against insured in an Indian court )- Additional premium as per UW discretion

6. Property (e.g. Godown office etc) Other than factory premises- premium loading 5- 20% on policy premium (including pollution but excluding transportation premium) based on number of such properties

Public Liability (Industrial risks) Policy - Non preferred risks

• Gradual or Environmental Pollution Cover, other than Accidental Pollution as extension under PL policies

• Standalone Petrol Pumps/Gas Stations – above the limits of INR 10 Lacs.

• Mining Activities

• Construction of Bridge/Tunnels 

• Covering Offshore, Oil & Gas 

• Explosive/Detonators Fuse Manufacturer.

 • Defence/Army & Navy 

• Cigar & Cigarette Factories. 

• Coal/Coke/Charcoal Manufacturer

• Any kind of manufacturing/Formulation Facilities in USA/Canada (Insured Domiciled in USA/Canada) 

• Marine/Cargo Handling Port Risk

Public Liability Insurance (Act) Policy

Policy is Mandatory by “Public Liability Insurance ACT 1991”

All persons handling hazardous goods are required to take public liability insurance prescribed under the Act (Absolute liability)

A list of 182 hazardous substances grouped under 5 categories is provided by notification under the Act 

Handling in relation to any hazardous substance means  the manufacture, processing ,treatment, package , storage , transportation by vehicle , use , collection, destruction, conversion , offering for sale , transfer or the like of such hazardous substance.

hazardous substance' means any substance or preparation which is defined as hazardous substance under the Environment ( Protection) Act, 1986

Public Liability Insurance (Act) Policy

FEATURES

No Fault Liability Only

Policy Ratio – Operates on 1:3 ratio only (AOA-AOY)

Maximum Indemnity Limit – INR 5:15 Cr.

Policy limits to be decided on Paid up Capital of Company

Premiums are calculated on Limits and Turnover of Company

50% Premium is contributed ERF – (Environment Relief Fund)

ERF Pool is maintained by United India Insurance Company

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Public Liability Insurance (Act) Policy

Claim

Fatal Accidents – INR 25,000/-

Medical Expenses – INR. 12,500/-

Total Permanent Disability – INR 25,000/-

Temporary Partial Disability – INR 1,000/-  per month, 3 months maximum. 

Property Damage – INR 6,000/-

Procedure of Compensation/Claim

Claims to be lodged by Victim within 5 years.

Claims lodged by Victim with Collector

Liability will be determined by Collector

Insured to give notice to Insurance Company

Product liability insurance Policy

What is a Product defines who can take this policy?

Product could be any tangible property after it has left the custody or control of the Insured which has been designed, specified, formulated , manufactured, constructed, installed, sold, supplied, distributed, treated, serviced, altered, or repeated by or on behalf of the insured

Following are broadly three reasons that could lead to a product defect

1    Manufacturing Defects (Negligence in execution of Production processes or the line)

2    Defects related to Sales (Storages, Transportation, Inadequate Labeling and directions  of use, Warnings)

3    Designed Defect (Related to Research & Development)

Product liability insurance Policy

Policy Coverage

Legal Liability due to claims arising out property damage and bodily injury due to defect in products, that is damage awarded by courts. 

Policy also pays – Defence & Investigation Cost (legal Costs & Related Expenses)

Policy Extensions

 - Named & Unnamed Vendors, Efficacy of Product.

 - North American Jurisdiction Clause. (Subject to specific retroactive date and compulsory deductible)

 - Third Party (Sub-contractors and/ or Loan and License) Manufacturers can be covered

 - Technical Collaborators

Product liability insurance Policy - Rating

RATING factors

  1. Nature of Product
  2. Turnover of Company
  3. Turnover of Product
  4. Product wise break Country wise Domestic, OECD, NON-OECD Countries & USA/Canada
  5. Limit of Indemnity
  6. Past Insurance history/Claims
  7. Reported Loss
  8. Jurisdiction

Tip

Basic rate depends on the risk group of product, there are 7 primary groups.  

Product liability insurance Policy - Exclusions

Major Exclusions

  1. Product Guarantee/Warrantee Pure Financial Losses and Recall Expenses
  2. Prior Acts
  3. Pending Litigation/s
  4. Fines, penalties &  Punitive Damages
  5. Terrorism
  6. Willful non compliance of any statutory requirements
  7. Loss of good will
  8. Products Manufactured/Formulated outside India.

Product Liability Insurance Policy

Non preferred risks 

Automobile Critical Parts/Components

Pharmaceutical (Excluding Bulk Drug, API) /Homeopathic/Ayurvedic/Health Care Product – India only risk can be accepted in case of sufficient premium.

Product Recall/Warrantee/Guarantee & Financial Loss

Tobacco Manufacturer

Ammunition/Explosive & Fireworks

Ladders

Scaffolding (Metal)

Aviation Hull/Parts & Aircraft Components.

Marine Hull

Non preferred risks 

Railway Hull/Parts.

Rope/Wire (Non-Metallic)

Transmission Lines Insulators/Surge Diverters/Instruments (only Installation/Erection/Testing)

Vehicle Tyre/Tubes & Tow Bars

Food Products/Spices & Frozen Items.

Contamination of Products Cover

Genetically Modified Organisms

Products Manufactured/Formulated in USA/Canada (Insured Domiciled in USA/Canada)

Asbestos

Commercial General Liability Insurance Policy - Development

Commercial General Liability (CGL) policy covers Liability arising out of Business Operations.

In 1940, the National Bureau of Casualty and Surety Underwriters and the Mutual Casualty Insurance Rating Bureau jointly authored the first CGL policy in USA.

Since then, the CGL form has been revised about 10 times. In 1971, the Insurance Services Office (“ISO”) was founded. ISO produces the most widely used insurance forms, including the now-standard CGL form.

In practice, CGL operates as combination of Public Liability and Product Liability policies and also offer various cover in the standard wording.

CGL form are accepted Worldwide!

Policy Versions – Claims Made & Occurrence Based

Commercial General Liability Policy - Coverage

Why is CGL the favorite Liability Policy in India & World?

Broad based wording provides comprehensive protection against:

Bodily Injury & Property Damage arising from General Liability (Public Liability) & Product Completed Operations (Product Liability)

Personal & Advertising Injury

Medical Payments

Fire Damage (Premises Rent or Occupied by Insured)

Commercial General Liability Policy - Coverage

In addition to Injury and damage claims under Public and Product liability, CGL also covers 

Personal and Advertising Injury Cover

Personal Injury –Liability for personal injury to third parties, which include both bodily harm and non-physical, non-economic harm. Injuries that are neither physical nor economic may include libel, slander, false arrest, discrimination, invasion of privacy, malicious prosecution.

Advertising injury –Arising out of oral or written statements made in the course of advertising activities that causes loss to another person or business by libel, slander, defamation, violation of privacy, piracy, misappropriation of ideas, infringement of copyright, trademark, title or slogan.

However, this coverage does not apply to companies who are in the business of advertising

Commercial General Liability Policy - Coverage

In addition to Injury and Damage claims under Public and Product liability, CGL also covers

Medical Payments or Medical Expenses

-  The Policy provides a sub-limit amount of coverage to pay for medical expenses to 3rd Parties for injuries caused by accidents.

Fire Damage Cover

 -  The Policy Provides a sub-limit amount of coverage to pay Damage caused to the premises rented or occupied by Insured.

This section works on a “No Fault” basis  i.e. suit need not be filed against the insured nor deductibles are applicable.

Commercial General Liability Policy - Extensions

Extension under CGL Policy

- Travel of Insured’s Executives 

- Worldwide Cover 

- Hired/Non-Hired Automobile Liability 

- Employers Liability (As per WC Policy) 

 - All other extensions, which are available under Public Liability & Product Liability Policies.

Commercial General Liability Policy - Exclusions

Exclusions under CGL Policy

-Professional Indemnity 

-Care, Custody and Control – Can be covered

-Expected or Intended Injury 

-Offshore risk 

-Aircraft, Auto or Watercraft excluding non owned 

-Product Recall / Guarantee / Warrantee exclusion 

-Manufacturing Facilities Outside India 

-Asbestos 

-Terrorism

Commercial General Liability Policy - Underwriting

Underwriting Information:

- Proposal form (duly filled & Signed) 

- Business Activity of Insured

- Turnover – Past, Present & Estimated 

- Country & Product wise Turnover – (Product Liability) 

- Contract copy, in case of contract specified

- Location details (General Liability/Public Liability) 

- Claims History & -Claims Reported But Not Paid

Employees Compensation Insurance (WC as amended)

If at any time during the Period of Insurance any Employee or Employees of the Insured shall sustain Injury by accident arising out of and in the course of his employment in the Business,

for which the Insured is liable to pay compensation under any Law(s) specified in the Schedule, then the Company shall indemnify the Insured up to the Limit of Indemnity against all sums for which the Insured shall be so liable, including costs and expenses for defending any such claim incurred with the Company’s consent.

Law(s) applicable:

 1.Workmen's compensation act (as amended in 2009) 2.Fatal accident act 3.Common law 

PROVIDED ALWAYS that in the event of any change in the Law(s) or the substitution of other legislation therefor, this Policy shall remain in force but the liability of the Company shall be limited to such sum as the Company would have been liable to pay if the Law(s) had remained unaltered.


Employees Compensation Insurance (WC as amended) - definitions

1.Wages means the remuneration payable to an Employee by the Insured for the employment in the Business and includes any privilege or benefit which is capable of being estimated in money other than a travelling allowance or the value of any travelling concession or a contribution paid by the employer of an employee towards any pension or provident fund or a sum paid to an employee to cover any special expenses entailed on him by the nature of his employment; 

2.  Employee or Employees means such person or persons in direct employment under the Insured in the Business, but shall not include any person employed under a Contractor or Sub-Contractor of the Insured unless specifically shown as covered in the Schedule and by an endorsement.

3.   Injury means physical bodily injury including death resulting from such injury arising out of an accident but does not  include any mental sickness, disease, Occupational Disease, unless caused by such physical bodily injury.


Employees Compensation Insurance (WC as amended) - Exclusions

a) War, and Nuclear risks

b) Accident occurring at any other place than the Place or Places of Employment specified in the Schedule, unless the Employee was at such other place whilst on duty for the purpose of the Business and on the directions of the Insured or any of its official authorized to exercise control and supervision over the Employee.

c) For Occupational Diseases contracted by an Employee

d) For interest and/or penalty imposed on the Insured under any law or otherwise.

e) Under any Law for medical expenses in connection with treatment of any Injury sustained by an Employee

f) For persons employed in the Business under a Contractor or Sub-Contractor of the Insured unless specifically covered in the Schedule

g) For Injury sustained by person whilst in the employ of the Insured otherwise than in the Business and/or who has is not declared for insurance under this Policy.

h) Assumed by agreement which would not have attached in the absence of such agreement

 i)For any sum which the Insured would have been entitled to recover from any party but for an agreement between the Insured and such party. 

j) For any accident occurring whilst the Employee is under the influence of intoxicating liquor or drugs.

k) For any incapacity or death of an Employee resulting from his/her deliberate self-injury

Employees Compensation Insurance (WC as amended) - Condition of Average

Condition of Average: Notwithstanding anything contained hereinabove,

(i) a) If the number of Employees (whether on duty or otherwise) employed by the Insured on the date of accident is higher than the number covered under this Policy, the Company shall indemnify Insured’s liability arising out of such accident, only in such proportion that the number of Employees covered bears to the Employees found employed on the date of accident.

b) If the amount of Wages declared for this insurance for all Employees is less than the actual Wages paid until date of accident, the Company shall be liable to indemnify on any claim only in proportion that the Wages declared bears to the Wages paid. For the purpose of this clause, the Wages declared shall be calculated proportionately for the period from commencement of Policy until date of accident for comparison with the actual wages paid during such period to determine applicability of this clause.

(ii) If more than one of the above clauses is found applicable in respect of a claim, only such clause under which the liability of the Company is least shall be applied.

Employees Compensation Insurance (WC as amended)

Documents required for processing the WC Claim–

  • Claim Form
  • FIR in case of Death, PTD and PPD
  • Death Certificate (original) in case of death claim
  • Post mortem (Attested legible copy) in case of death claim
  • PTD-Doctors certificate certifying permanency of disability.
  • PPD-Doctors Certificate certifying permanency of disability.
  • TTD-Doctors Certificate certifying period of disability.
  • Detailed Note on incident from Site-In-charge
  • Wages slips;  Attendance particulars;  Birth certificate or School leaving certificate.
  • Original Medical Bills and Receipts

Does condition of Average apply to employee compensation claims?

  • Yes
  • No
  • Will check and confirm

Is Jurisdiction a consideration in rating of Product liability/ CGL policies?

  • Yes
  • No
  • Will check and confirm

Can risk of technical collaborator be covered under Product Liability policy?

  • Yes
  • No
  • Will check and confirm

When was first CGL policy issued in USA?

  • 1940
  • 1970
  • 2000

When was employees compensation act (latest WC amendment) passed ?

  • 2009
  • 2000
  • 1923

What is the amount of relief/ compensation for fatal claim under Public liability Act Insurance?

  • 25000
  • 6000
  • 12500

Who is the authority for awarding claim in Public Liability Act Insurance?

  • District Collector
  • Labor Commissioner
  • Civil Court

When was Market agreement Public liability policy introduced in India?

  • 1991
  • 1999
  • 2001

Failure of product to fulfill its intended purpose is called Efficacy risk, can there be a product liability claim on this basis?

  • No
  • Yes
  • Will check and confirm

Do we have pre underwritten products in Public liability Insurance for 1 Crore limit?

  • Yes
  • No
  • Will check and confirm

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Congratulations! on completing first part of this learning course on Liability (Development and Casualty Liability Products)

Hope to see you soon in the second and concluding part of this course (Financial Liability and New Products)