Insurance, Claims & Accidents

Archive for the ‘Liability Insurance’ Category

Liability insurance protects the purchaser by providing coverage in the event that the policyholder is sued, and is designed to give specific protection against third party claims of damage or injury. 

A liability insurer has certain duties and obligations to the insured, namely to defend, to indemnify, and to resolve reasonable claims.  Breaching any of these three duties means the insurer can be held liable for a tort of insurance bad faith in addition to being held in breach of contract.

Duty to Defend

When the insured party is sued, the liability insurer has three options: they can seek a declaratory judgement of no coverage, meaning that the claim is not coverable under the purchased policy; they can defend the insured party against the suit; or they can elect to refuse either to defend or to seek a declaratory judgement. 

Insurers often defend rather than do nothing.  If nothing is done and it is later determined that the duty to defend applied to the situation, the insurer could risk a suit themselves on the basis of bad faith.

Duty to Indemnify

The insurer has the duty to pay all cost for which the policyholder is deemed to be liable for up to the agreed policy limit.   

Duty to Settle Reasonable Claims

If the claim is reasonably clear, the insurance company is obligated to settle the claim and not risk endangering the insured party in an attempt to avoid having to pay on the policy.

There are some types of liability insurance that need to be in place for very specific circumstances. Sometimes they are included as a clause within the main type of liability insurance a business has. Examples of this are pollution and also property liability insurance.

Most public liability insurance policies will cover normal types of pollution for which a business may be responsible. This will cover any damage or ill health that could be caused by the pollution. However, for one-off incidents that are not typical, more specific pollution liability insurance is needed. This can occur in industries where there is potentially a high risk of an incident occurring, such as the oil industry. These companies will normally need a policy especially for them such as environmental impairment liability. These are designed to cover a whole industry sector or a very specific business. Clean-up costs caused by pollution, damage to property and any sicknesses caused are covered by these policies. The Environmental Agency is responsible for regulation in this case.

Property owners’ liability insurance covers any damages or injury caused while on the premises of a business, or which might be linked to the premises in some way. For individuals who own their own homes this will normally be part of general household insurance. For most companies, public liability insurance will include this. However, if a business is conducted in a place owned by a landlord, one or the other of the parties needs to make sure proper property owners’ liability is in place.

People who run a business, own property or employ staff are often required to get public liability insurance.  Even if not required to do so by law, it is often wise to invest in this type of insurance.  Public liability insurance can help ensure that your business is financially covered in the event of unexpected accidents or damage to property. 

Not all businesses have a physical property, and many businesses employ staff that work offsite; public liability insurance also takes this into account.  Under the Employers’ Liability (Compulsory Insurance) Act 1969, injuries that happen to members of staff whilst at work – whether at the employer’s property or offsite – are covered by liability insurance.  This includes injuries due to accidents, as well as chronic health conditions that arise due to the work environment, even if employees no longer work for the company. 

Public liability insurance will also cover any injury or property damage caused by your employee whilst at work, which is particularly relevant if you have employees who work off site.  This insurance is an important consideration for property owners and landlords, particularly those who rent their property as landlords have both a duty to get liability insurance and to ensure that their properties are safe and habitable.  Individuals should always check their insurance terms and conditions to ensure that they have appropriate levels of cover, and that the financial limits of their policy are sufficient for their specific circumstances.