In this article we will be exploring the various types of Liability Insurance available.
Unlike most other insurances Liability cover does not cover a physical object such as a car or a house.
These types of insurance are arranged to protect the Insured from claims being made against them for injury to persons (employees or third parties) or damage to property.
It is very important to remember that the cover is on a ‘legal liability’ basis and that claims will only be paid if it is established that the Insured has been negligent and is therefore legally liable.
Employers
This covers the Insured’s legal liability for bodily injury or disease to employees if caused during the period of insurance.
The policy also covers any legal costs and expenses.
Cover does not apply for injury or disease caused outside the UK except for UK based employees.
The normal Indemnity Limit (limit of cover) is £10,000,000 for any one occurrence and unlimited during the period of Insurance.
Premiums are normally based on Wage Roll with different rates applying depending on the type of work carried out by the employee.
Theis cover is required by law under the Employers Liability (Compulsory Insurance) Act 1969 for a minimum Indemnity Limit of £5,000,000
Public Liability Insurance
This covers the Insured’s legal liability for third party injury and damage to third part property arising from the business.
The policy also covers any legal costs and expenses.
Indemnity Limits are normally arranged for £2,000,000 £5,000,000 and £10,000,000 although higher limits are available.
The Indemnity Limit applies to any one occurrence and unlimited during the period of insurance.
Premiums can either be based on Wage Roll or more frequently the Turnover of the business with higher rates applying to more hazardous work.
Products Liability
This covers the Insured’s legal liability for accidental injury or damage to third part property caused by products supplied by the Insured.
The policy also covers any legal costs and expenses.
Indemnity Limits normally follow the Public Liability cover but it is important to note that this limit whilst applying to any one accident also applies in the aggregate meaning that this is the policies overall cover limit – it is not unlimited in the period of insurance as with Employers and Public Liability Insurance
Premiums can either be based on Wage Roll or more frequently the Turnover of the business with higher rates applying to more hazardous work.
Geographical Limits also normally apply depending on where products are exported to with much higher rates applying to the USA element in view of very high court awards that can be made under their legislation.
Excess Liability
This type of cover is only available for Public and Products Liability.
These policies will provide very high Indemnity Limits such as £20,000,000 and will only make any payment when the cover under the main insurance(often called the primary layer) has been exhausted.
An individual Insurer may not wish to cover such a high Indemnity Limit under a single policy so this enables the much bigger risks to be shared between several Insurers.
