Risk Management & Insurance

CHAPTER – SEVEN
NON- LIFE INSURANCE
2

Chapter Seven:
Non-Life Insurance

7.1. Personal Auto Insurance

7.2. Commercial Liability Insurance

7.3. Commercial property Insurance

Agenda

7.1. Personal Auto Insurance (Motor)

7.2. Commercial Liability Insurance

7.3. Commercial property Insurance

7.1. Personal Auto Insurance (Motor)

7.1.1 Basics / What it is?

7.1.2 Coverage/ What it covers ?
Part A: Liability
Coverage
Part B: Medical Payments Coverage
Part C: Uninsured Motorists Coverage
Part D: Coverage for Damage to Your Auto
Part E: Duties After an Accident or Loss
Part F: General Provisions
7.1.1. Personal Auto Policy Basics
Eligible vehicles include:


 A four-wheeled motor vehicle owned or leased by the insured for at least six
consecutive months
7.1.1. Personal Auto Policy Basics
Autos covered by the policy include:


 Any auto shown in the declarations

 A newly acquired auto

 a replacement vehicle

 A temporary substitute vehicle, which is a no owned auto used

temporarily because of mechanical breakdown, repair, servicing,
loss, or destruction of a covered vehicle
7.1. Personal Auto Insurance (Motor)

7.1.2 Coverage/ What it covers ?

Part A: Liability
Coverage
Part B: Medical Payments Coverage
Part C: Uninsured Motorists Coverage
Part D: Coverage for Damage to Your Auto
Part E: Duties After an Accident or Loss
Part F: General Provisions
Part A: Liability Coverage
 Liability coverage (Part A):

 Is the most important part of the PAP

 It protects a covered person against a suit or claim arising out of

the ownership or operation of a covered vehicle

 The coverage is usually written in split limits, where the amounts

of insurance for:
 bodily injury liability and
 property damage liability are stated separately
Part A: Liability Coverage …con
 Split limits coverage , example
 split limits of 250/500/100 mean that you have:
 bodily injury coverage of Br 250,000 for each person,
 a maximum of Br 500,000 of bodily injury coverage per accident, and
 a maximum of Br 100,000 for property damage liability
Part A: Liability Coverage …con
 Liability coverage applies to:
 The named insured and any resident family member

 Any person using the named insured’s covered auto (with consent)

 Any person or organization legally responsible for any insured’s

use of a covered auto on behalf of that person or organization

 Any person or organization legally responsible for the named

insured’s or family members’ use of any auto
Part A: Liability Coverage …con
 Exclusions to the coverage include:
 Intentional injury or damage

 Property rented, used, or in the insured’s care

 Bodily injury to an employee

 Vehicles with fewer than four wheels

 E.T.C
Part B: Medical Payments

 Medical payments coverage covers all reasonable medical

and funeral expenses incurred by an insured in an accident

 Two groups are eligible for coverage:

 The named insured and family members are covered:
 Other persons occupying a covered auto are covered

 Covers medical services rendered within three years from the

date of the accident
Part C: Uninsured Motorists Coverage
 The uninsured motorists coverage pays for the bodily
injury caused by an uninsured motorist, by a hit-and-run
driver, or by a negligent driver whose insurance
company is insolvent

 The coverage applies to:

 The named insured and family members
 Any other person while occupying a covered auto
Part C: Uninsured Motorists Coverage
 Coverage does not apply when:

 An insured is injured in, or by, a vehicle owned by the named insured, but
not insured under the policy

 There is primary coverage under another policy

What does this mean ?

Part D: Coverage for Damage to Your
Auto
 Under the coverage for damage to your auto, the insurer agrees to pay
for any direct and accidental loss to a covered auto or any
nonowned auto

 Two optional coverages are available:

 Collision coverage:

 A collision is defined as the upset of your covered auto or nonowned auto or its
impact with another vehicle or object
 Collision losses are paid regardless of fault

 Other-than-collision coverage:
Part D: Coverage for Damage to Your
Auto
 Two optional coverages are available:
 Collision coverage:
 Other-than-collision coverage:
 other-than-collision loss is a loss due to the following perils:
 Missiles or falling objects
 Hail, water
 Fire
 Uprising or civil commotion
 Contact with a bird or animal
 Theft
 Explosion or earthquake, Windstorm
Part E: Duties After an Accident or Loss

1. After an accident, the insured is required to

perform certain duties, such as:

 Promptly notify the insurance company or agent

 Cooperate with the insurer in the investigation and
settlement of a claim
 Send the insurer copies of any legal notices received
in connection with an accident
 Take a physical exam, if required
Part E: Duties After an Accident or Loss

2. The police must be notified if a hit-and-run driver is

involved

3. The insurer must be allowed to inspect your vehicle if

you are seeking coverage under Part D

4. The insurer can deny coverage only if failure to comply is

prejudicial to the insurer
Part F: General Provisions
 The PAP provides coverage in Specified geographic area

 The law often restrict the insurer’s right to cancel or nonrenew

coverage

 Termination provisions include:

 Cancellation:
 Nonrenewal:
 Automatic termination:
Part F: General Provisions
 Cancellation:
 The named insured can cancel at any time by returning the policy to
the insurer or providing written notice.
 If a policy has been in force for more than 60 days, the insurer can
cancel only if:
 The premium has not been paid
 The driver’s license of any insured has been suspended, or
 The policy was obtained through material misrepresentation
 Nonrenewal:
 if an insurer decides to discontinue coverage, the insured must be given
notice at least 20 days before the end of the policy period
 Automatic termination:
 a policy is automatically terminated if the insured decline’s the
insurer’s offer to renew
Agenda 7.2
7.2. Commercial Liability Insurance
 Types of Liability Insurance
 Liability Insurance payments
 Some types of Liability Insurance
1. Products Liability :
2. Employment Practices Liability:
3. Professional Liability:
4. Nuclear Liability:
5. Environmental Liability:
Types of Liability Insurance
Liability exposures can be classified into several categories.
 Direct Liability: Liability imposed because of being directly
involved in causing an injury.
 Premises and operations
 Products liability
 Completed operations
 Auto liability
Vicarious Liability: being held legally liable through the action of
law.
Contractual Liability: being held legally liable through a contract.
Liability Insurance payments
 How does liability insurance respond when a person or
organization is sued for legal liability?

 The legal liability contract is designed to respond when the insured is:
 legally liable to pay damages

 Caused by an insured event e.g. bodily injury, property damage

 From a specific source e.g.

 products liability,
 completed operations,
 premises,
 professional
 And not excluded by the contract
 Defenses costs can be “within” policy limits or not within policy limits.
Special Liability Insurance Examples

1. Products Liability :
 Legal liability for injury caused by any type of product placed in the stream of
commerce.
2. Employment Practices Liability:
 Legal liability arising out of injuries caused by improper hiring, firing, promoting,
etc. of employees.
3. Professional Liability:
 Legal liability for injury arising out of providing a service and or holding oneself
out as a professional.
4. Nuclear Liability:
 Legal liability arising out of injuries caused by the exposure to nuclear radiation.
5. Environmental Liability:
 being held legally liable for damaging the environment.
1. Products Liability insurance and Legal Duties

 Products Liability can arise out of any product that enters

the stream of commerce which causes an injury.

 Liability can arise out of:

 Breach of warranty – product is not fit for its intended design or use.
 Negligence – the failure to use reasonable care.

 Legal duties with respect to product liability. Includes

 Produce a product that does not injure
 Package carefully
 Provide adequate instructions
 Provide adequate warnings
2. Employment Practices Liability
 Laws protecting women, minorities, disabled, and aged
 Employment practices liability is a major concern and there are
a series of laws involved in protecting different classes of
people. All of these laws have an impact on the employment
relationship.
 Examples of Suits
 Negligent hiring
 Invasion of privacy
 Negligent supervision
 Negligent discharge
 Wrongful discipline
 Negligent evaluation
 Negligent recommendations
3. Professional Liability
The difference between professional liability and products
liability
 Product liability arises out of a product that has entered
the stream of commerce.
 professional liability arises out of performing a service.
 Also Called malpractice or errors or omission insurance

 Any professional performing a service can be held

legally liable for negligence
Suits are not settled without the insured’s consent
Examples of professional liability
 These are examples of professional liability
coverage:
 Physicians’, Surgeons’, and Dentists’ Liability Policy
 Hospital Liability Policy
 Directors’ and Officers’ Liability
 Errors and Omissions Insurance
 Completed Operations Insurance
7.3. Commercial Property Insurance
 Commercial versus Personal
Insurance
 Types of property insurance
1. Ocean Marine Insurance
2. Inland marine insurance
3. Aviation Insurance
4. Business Automobile Insurance
 Commercial versus Personal Insurance

The insurance industry in the Property area is split into personal and
commercial lines.
 Personal lines are the insurance contracts that individuals buy for
their individual or family exposures.
 Commercial contracts are the insurance contracts the businesses
buy.
Business Personal
Homeowners
Commercial Package - Dwelling
- Property Damage
- Personal property
- Liability
- Legal liability
- Inland Marine
- Some medial payments
- Crime
- Commercial Auto Personal Auto
- Liability
- Property damage
- Some medical payments
1. Ocean Marine Insurance
 Historically, one of the earliest forms of insurance.
 Currently, very important to worldwide commerce
 Covers perils “of the sea” and “on the sea” and is
not actually open-peril coverage (all risk)
 Such as Cargo, Freight, Liability (protection and
indemnity coverage)
2. Inland marine insurance

 Property for export

 Property in transit following import
 Domestic property being shipped
 Property which facilitates communication and
transportation
 Property easily moved and of high value
 3. Aviation Insurance
 Aircraft includes planes, helicopters, and space
satellites
 Separate coverage provided for commercial

and private aircraft

 Covers hull, freight, cargo, and liability
 4. Commercial Automobile Insurance

 Covers
 Legal liability
 Physical damage - collision versus other than collision
coverage
 Some medical expenses - workers’ compensation pays
for injuries to employees
 Uninsured motorist coverage
End !
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