LIABILITY INSUARANCE

LIABILITY INSUARANCE
1. PROJECT REPORT ON LIABILITY INSUARANCE

 By:

 Vinay Lalit Chauhan

 FYBFM-35

 K.J.Somaiya

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o Contents:-

o Introduction

o Public liability Insuarance (industrial risks) policy

o Public liability Insurance (non-industrial risks) policy

o Product liability

o Public liability act only

o Workmens’ compensation policy

o Director and officers liability Insuarance

o Professional indemnity(doctors and medical

practitioners)

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 LIABILITY INSUARANCE

Irrespective of the size of business, it is pivotal to consider liability insurance. It

is prudent to cover your business against all kinds of liabilities -- public liability
(third party injury or property damage) from industrial and non-industrial
operations, product liability, professional indemnity, D&O liability and E&O
liability. ICICI Lombard offers wide array of liability products to suit your
business needs.

Public Liability Insurance (Industrial Risks)

Policy

Scope of cover
Legal liability of the Insured towards damages to third party with respect to:

accidental death
bodily injury or disease
loss or damage to property.
Legal costs and expenses incurred with the prior consent of the Insurer and
within the limit of indemnity.

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Sum Insured

Depending on exposure, the Proposer has to fix two limits of indemnity as under (for both premises and
transportation):

any One Accident (AOA)

any One Year (AOY)

AOA and AOY can be in ratio of 1:1, 1:2, 1:3 or 1:4. It is not permissible to issue the policy with
unlimited liability.

This Policy does not cover liability arising out of or in connection with:

pollution
any product
personal injuries such as: 
* libel
* slander
* fines
* penalties punitive or exemplary damages

Premium

Premium depends on:

risk group
limits of indemnity selected
ratio of limits
number of locations
annual turnover.
Excess

Policy is subject to a compulsory excess of 0.5% of AOA limit, subject to a maximum of Rs

3,00,000/- and minimum of Rs 2000/-. Higher excess opted on a voluntary basis qualifies for a
discount in the premium level.

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Main Extension

Industrial Seepage, pollution and contamination extension

Carriage of effluents (outside the premises) extension
Transportation extension
Technical collaborators extension
Act Of god
Perils extension.

public Liability Insurance (Non-Industrial Risks)

Policy

Scope Of Cover

This Policy broadly covers:

Legal liability of the Insured towards damages to the third party with respect to:
accidental death
bodily injury or disease
loss or damage to property

Legal costs and expenses incurred with the prior consent of the Insurer and within the limit of
indemnity. 

Sum Insured

Depending on exposure, the Proposer has to fix two limits of indemnity under the policy:
Any One Accident (AOA)
Any One Year (AOY)

AOA and AOY can be in ratio of 1:1, 1:2, 1:3 or 1:4. It is not permissible to issue the policy
with unlimited liability.

Premium

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Premium chargeable depends on the:

risk group
limits of indemnity selected
ratio of limits
number of locations
annual turnover
Significant Exclusions

This Policy does not cover liability arising out of or in connection with:
pollution
any product
any professional services deficiency
personal injuries such as libel, slander, fines, penalties
punitive or exemplary damages
fines
transportation of materials

Excess

Policy is subject to compulsory excess of 0.25% of AOA limit, subject to a:

Maximum of Rs 1,00,000/-
Minimum of Rs 1000/-

Higher excess opted on a voluntary basis qualifies for discount in premium. 

Main Extension

These include:
goods kept in Custody of Insured Extension
food and Beverages Extension
industrial Seepage, Pollution and Contamination Extension
sports facilities, Swimming Pool and other facilities Extension
transportation Extension
act Of God
perils Extension

Product Liability
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Introduction

Safety and reliability of products are an important concern to consumers, sellers & manufacturers. Faulty products
can be hazardous for the consumers' health & property. The manufacturer/ seller of faulty could be held liable for
such damages, exposing themselves to financial losses.

Product liability insurance protects the companies exposed to above risk by financially assisting policyholders in
such situations.

Scope of cover

This Policy broadly covers:

Legal liability of the Insured towards damages to the third party arising due to faulty products manufactured / sold
by the insured, liability with respect to:
Accidental death
Bodily injury or disease
Loss or damage to property

Legal costs and expenses incurred with the prior consent of the Insurer and within the limit of indemnity. 

Sum Insured

Depending on exposure (end users, sales territories, nature of products & turnover), the proposer has to fix two
limits of indemnity under the policy:

Any One Accident (AOA)

Any One Year (AOY)

AOA and AOY can be in ratio of 1:1, 1:2, and 1:3 and maximum can be 1:4. It is not permissible to issue the
policy with unlimited liability. 

Premium

Premium chargeable depends on the:

Risk group (products to be covered)

Turnover of products (for proposed period of insurance)
Sales territories
Limits of indemnity selected
Ratio of limits
Quality control system & R&D strength of the insured
Claims experience

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Significant Exclusions

This Policy does not cover liability arising out of or in connection with:

Product efficacy
Product recall
Product guarantee
Pure financial loss
Terrorism, war & SRCC
Any professional services deficiency
Personal injuries such as libel, slander
Fines, penalties and punitive or exemplary damages

Excess

Policy is subject to compulsory & minimum excess of 0.5% of AOA limit

Discount
Higher excess opted on a voluntary basis qualifies for discount in premium. 

Main Extension

Limited named vendor's liability

North American jurisdiction clause (covering exports to American countries)
Technical collaborator's clause

Public Liability Act Only

Scope of cover

This Policy broadly covers the Owner’s statutory liability on the no-fault principle for the following
conditions resulting from an accident while handling any hazardous substances:

death of or injury to any person

damage to property
Sum Insured

The Public Liability Insurance Act, 1991 provides that the Indemnity limit for Any One Accident should
not be less than the paid-up capital of the undertaking and not more than the amount, as may be
prescribed by rules framed under the Act.

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The rule currently stipulates that the Insurer is liable to pay not more than Rs. 50 Million for any one
accident and not more than Rs 150 Million for any one-year.

Premium

Premium charged depends on two factors:

limit of indemnity selected

annual turnover (Gross Sales of all goods including all levies and taxes)

A matching amount should be contributed towards the Environment Relief Fund 

Significant Exclusions

This Insurance Policy does not cover liability arising out of willful or intentional non-compliance of any
statutory provisions, with respect to fines and penalties. 

Workmens’ Compensation Policy

Scope of cover

The policy, provides for two forms of insurance viz,

Table ‘A’ - Indemnity against legal liability to all employees (whether or not coming within the
definition of the term Workmen) under the W.C.Act 1923 and subsequent amendment to the
said Act prior to the date of issue of the policy, the Fatal Accidents Act, 1855 and at Common
Law.

Table ‘B’ - Indemnity against legal liability under the Fatal Accidents Act, 1855 and Common
Law. (Table ‘B’ policies may not be issued to cover employees who fall within the definition of
“Workmen” under the Workmen’s Compensation Act, 1923 as amended).
Sum Insured

The policy does not have a Sum Insured but the estimated “Earnings” of the workmen for the
policy period is mentioned on the policy.

Premium

The Premium rate depends on the occupation of the workmen and his/her annual “Earnings”

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Significant Exclusions

The Insurance Policy does not cover losses arising out of war and allied perils, nuclear
activities and contractual liabilities.

Main Extension

Medical Expenses
Occupational Diseases

Director & Officers Liability Insurance

Introduction

Directors and officers of a hold a position of trust are responsible towards the company, the shareholders, the
employees, and the public at large. They may become liable to pay damages in scenarios such as the following:

Mis-statement in prospectus
Inaccurate statement of financial conditions
Errors in annual accounts
Conflict of interest
Lack of judgment, diligence, good faith
Mismanagement of funds
Unfair allotment of shares
Using insider information
Unwarranted dividend, salary, compensation payments
Unfair dismissal of an employee

Our Directors and Officers Liability policy protects the personal fortunes of individual directors and officers, in
respect of personal liabilities arising out of their wrongful acts like breach of duty, breach of trust, neglect, error,
misstatement or misleading statement. 
Salient Features

Former, present, future directors are all covered. (All wrongful acts committed or alleged to have been
committed).
Parent company and existing subsidiary companies covered
Defence costs payable (even in alleged criminal cases, if directors and officers are finally acquitted)
Cover on claims: wrongful act committed or alleged to have been committed and all liability reported during
the period covered

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Sum Insured

The policy is a subject to the terms and conditions, advance defence costs and allows for settlements / judgements /
awards against insured persons for their wrongful acts.

The insurance policy has two coverage clauses: 

Legal liability towards claims made against the Insured Person (s) to the extent not indemnified by the
Insured Organisation
Reimbursement to the Insured Organization on account of indemnification to each Insured Person. The policy
additionally covers heirs, estates & legal representatives and spousal liabilities.

Premium

Premium chargeable depends on the:

Limits of indemnity
Industry of the proposer
Management perception to various stakeholders
Capital structure of company: Source of Shareholder funds - Foreign v/s Domestic exposure, Debt structure
Credit rating of the company to honour future financial commitments
Clientele of the proposer
Annual turnover
Auditors of the company
Information gathered about the company from public sources

Significant Exclusions

This policy does not cover:

Liability for criminal wrongs

Fines and penalties for civil wrongs

Prior or pending litigation

Suits or arising from person who is a major shareholder

Bodily injury/ property damage · Infringement of intellectual property rights

Main Extension

Crisis Communication Cover

Risk Management Extension

Pollution Defence Costs Extension

Extended reporting Period

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Professional Indemnity (Doctors & Medical

Practitioners)

Protection for the experts, by the experts 

For a patient, his doctor is someone who promises good health by putting him on the right
fitness condition when an emergency lands. Unfortunately, human error cannot be eliminated
and doctors are exposed to the risk of claims from clients who have suffered loss due to neglect,
error or omission.

In today's litigious world, claims can pose a significant threat to the financial security for a
medical practitioner. Your expertise is protecting the health of your clients. Our expertise is
advising you how to protect your professional interest.

Our Professional Indemnity for Doctors Policy protects you against

Claims arising out of bodily injury or death caused by error, omission, negligence
Legal liability including
Defence costs (costs, fees, expenses) incurred while investigation, cost of representation,
compensation etc.
Scope of cover

This Policy broadly covers:

Bodily injury and / or death of any patient caused by or alleged to have been caused by
error, omission or negligence in professional service rendered or which should have been
rendered by the insured doctor
Legal costs and expenses

Sum Insured

Depending on exposure, the proposer has to fix two limits of indemnity under the policy:
Any One Accident (AOA)
Any One - Year (AOY)
AOA and AOY can be in ratio of 1:1 or 1:2. 

Premium

Premium chargeable depends on the:

Risk group of doctor

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Limits of indemnity selected

Ratio of limits

Significant Exclusions

This Policy does not cover liability arising out of or in connection with: 
Criminal acts
Acts committed under Influence of intoxicants / narcotics
Weight reduction
Plastic surgery
HIV Aids
Non compliance with statutory provisions
Punitive and exemplary damages
Radioactivity
Blood Banks

Excess

To be chosen by the insured 

Scope and Jurisdiction

0.25% of AOA
India only

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