6 - Liability Insurance Flashcards
What does the Employers liability compulsory act 1969 mean?
Employers must be insured against liability for bodily injury or disease sustained by their employees arising out of and in the course of their employment
What is the limit of EL?
From £2 million to £5 million. In practice, most insurers have provided a limit of £10 Million
What is the Employers Liability Tracing Office (ELTO)
ELTO members are required to supply policy data to the register and their ERN number to the Employers liability database
To pay out What are the 4 significant things for EL
- Must be caused during the period of insurance
- Arising out of and in the course of their employment
- In connection with trade or business
- Occurring within certain territorial limit
What is a vicarious liability in regards to EL?
EL also applies where the actual act of negligence was also perpetrated by a fellow employee
Is employees property covered under EL?
No, only disease injury or death.
Property under PL
What is the definition of an employee?
Any person who is under a contract of service or apprenticeship
So can include direct employees, self-employed, hired persons, and students on work experience
Why is it important that the trade or business is fully disclosed on EL polices
To avoid problems with claims from work carried out that goes beyond the business stated in the schedule
What are the territorial limits for EL?
GB, Northern Ireland, the Isle of Man, Channel Islands
What is the period of insurance for bodily injury or disease?
Must be caused during the period of insurance
What are the two extensions to EL cover?
- Defence costs and expenses - as well as paying compensation to the claimant can indemnify the policyholder too
- Additional persons insured
What are the 3 limitations to EL insurance?
- Restricting the definition of business
- By excluding certain kinds of work
- By excluding certain machines
What are most EL policies rated on?
Wages for different categories of job type. Usually estimated at the beginning of the insurance
Are claims for employees who are passengers covered under EL insurance?
No, motor insurance
What does it mean that public liability is an ‘open’ policy
Instead of the scope of cover being specified by insured perils, it is defined by the exclusion of specific perils.
What is PL cover designed for
To compensate in respect of claims for legal liability from members of the public or companies who may suffer due to their negligence
What cover is provided for PL
Legal liabilities to third parties for damages (including claimant’s costs and expenses) in respect of bodily injury, death, disease or illness.
How is loss of or damage to property covered under PL
covers the risk of physical damage to material property or indirect economic loss, liability for loss of property is also covered
Excluding intangibles (such as copyrights, patents, trademarks)
What is a pure financial loss under PL
Financial loss which a third party may be able to claim even at the the absence of injury to persons or damage to property
What are the 2 optional extensions to PL
- Tenants liability- loss or damage to rented premises
2. Defective premises- covered liability to defects in premises that have been owned or occupied
What are the 12 exclusions to PL cover
- Injury to employee (covered under EL)
- Property belonging to the insured (covered under material damage policy)
- Product liability (covered under product liability)
- Contractual liability
- Cost of rectifying defective work
- Professional negligence
- Deliberate acts
- Motor vehicles
- Vessels and craft (covered under Marine policy)
- Lifts, elevators and boilers Covered under engineering policy)
- War risks
- Radioactive contamination
What are the 4 typical hazards in respect of product liability
- Electrical appliances
- Food manufacturers
- Tyres
- Weed killers and fertilisers
What is the standard policy cover for product liability
Legal liability for bodily injury or property damage which during the period of insurance which arises out of goods or products manufactured, constructed, serviced, repaired, sold, etc.
Does Product liability policies cover consequential losses
Only if these flow directly from loss or damage for which the insured is legally liable
What are the 4 limitations to product liability cover
- Contractual liability - where the insured has entered into a specific contract with another party
- Damage to goods supplied - cost of recalling faulty product
- Faulty design or formula
- Unsuitability or failure to perform
Under directors ‘and officers’ directors statutory duties are to the following 7 things:
- Act within powers
- Promote the success of the company
- Exercise independent judgement
- Exercise reasonable care, skill and diligence
- Avoid conflicts of interest
- Not accept benefits from third parties
- Declare an interest in any proposed transaction with the company
What does the companies act 2004 do in relation to directors and officers
Allows companies to assist their directors financially whilst ligation proceedings are going on.
Also permits then to indemnity their directors against certain liabilities to third parties
Under directors and officers policies what 6 things may liability arise from
- Negligence advice or misstatement
- Acts outside the company’s constitution
- Failure to disclose conflicting interests
- Errors of judgement
- Negligent supervision
- Imprudent investments
What are the two elements of standard policy cover for D&O policies
- cover for the directors and officers in their personal capacity when they are unable to claim from the company
- cover to protect the company in circumstances where it is permitted to indemnify the directors or officers such as legal costs
What is mean that D&O cover is ‘claims made’?
The policy covers all claims notified to the insurer or the insured during the period of insurance, no matter when the event giving rise to the loss occurred
What is mean that D&O policy limit is an ‘annual aggregate’?
the ‘annual aggregate’ meaning only one single limit for all claims against all the insureds during the policy year
What are the 10 main exclusions for D&O policies
- Prior notification
- Prior and pending litigation
- A jurisdiction clause (may exclude actions in the USA or Canada)
- Bodily injury and property damage
- Pollution and contamination
- Claims based upon improper personal gain by a director
- Fraud or dishonesty
- Insured v insured: to avoid internal conflicts in the organisation
- Breach of professional indemnity
- Fines, penalties and punitive (karny) damages
What is professional indemnity insurance
Protects a professional person against claims which might be made alleging that injury or loss resulted from their actions or advice
What are 3 examples of PI risks
And insurance broker
An investment consultant
A surveyor
What is the standard policy cover for PI
Covers liability for members of a profession for injury, damage or financial loss to client or the public as a result of a breach of their professional duty
What liability policies are on a ‘claims occurring’ basis, meaning that so long as the events giving rise to a claim happens during the period of insurance the policy will respond, even when the claim is notified after the policy had expired
EL
PL
Product
What liability policies are on a claims made basis
Professional indemnity
D&O
What are the 6 optional extensions for PI policies
- Continuation of cover beyond cancellation.
- Liability breach of warranty
- Liability for financial loss caused by loss of documents
- Collateral warranties (collateral=dodatkowy)
- Cover for any other person or form acting jointly with the insured
- Fidelity guarantee (Fidelity Guarantee Insurance provides coverage against any direct financial loss sustained by the employer through acts of fraud, dishonesty, forgery or theft, committed by employees in connection with their occupation and duties.)
What is excluded under PI
Dishonesty from the insured
Policy excess is usually a minimum of £500
How is the premium for PI calculated
Rates on the gross fees, gross revenue or the amount or indemnity
What are the 2 types of Trustee for whom cover is required?
Person fund trustees
Charity trustees
What is a pension fund trustee insurance?
designed to cover internal maladministration or a pension fund resulting in court against trustees, losses to the pension fund plus defence costs
What basis is cover in regards to pension fund trustees
Claims made basis
A claims made policy will consider claims which are made during the period of the insurance policy and which must also be notified to the insurer in that same policy period
What is the standard policy cover for trustee indemnity insurance
Cover against the risk of personal liability for the commission of a wrongful act
What is a charity trustee
Someone who has the power to insure any property that is subject to the trust against risks or loss or damage due to any event
What is trustee indemnity insurance
The insurance is specifically design to cover the management risks incurred by charities and their trustees.
What are the 3 limitations to trustee indemnity
- Fines
- Costs unsuccessfully defending criminal prosecutions arising out of fraud
- Liabilities to the charity arising from conduct which the trustee knew
What cyber insurance covers?
Property, pecuniary and liability risks arising from cyber issues.
Exclusions for cyber insurance:
- Employers’ liability
- Product Liability
- Fines and penalties against public interest
- Time excess (loss of business income or extra cost arising during the time excess period from 12 hrs to 168hrs)
What is an extended warranty
Personal insurance offers to purchasers of consumer durables
What is the standard policy cover for extended warranties
Is for free repairs following electrical an mechanical defects for up to 5 years
Usually markets by retailers
Who underwrites extended warranty policies
An authorised insurance company or Lloyd’s syndicate for a typical sum insured of £2,500 per household
What are the 4 limitations to extended warranties
- Failure to comply with manufacturers instructions
- Risks normally covered under a household contents policy
- War
- Costs of repairs to bulbs, aerials, external wires, knobs, handles
