A liability insurance policy offers to cover the business owners, professionals and self-employed people from risks that they may be held legally liable by customers as well as the general public for malpractice, injury or negligence. The policy protects you against legal costs and claims which covers: Death or against the cost of compensation claims due to malpractice, injury or negligence. There are different types of liability insurance policies as mentioned below:

Commercial General liability (CGL) Policy:

A CGL policy protects the businesses against the claims arising out of bodily injury and property damage arising out of:

• Premises
• Operations
• Products
• Completed operations

This policy therefore provides indemnity to the insured for his legal liability for:

• Accidental bodily injury to or illness or death of a third party.
• Accidental loss of or damage to property occurring in connection with the insured’s business, if such injury or damage occurs on the insured’s premise It also covers the losses caused due to advertising and personal injury.

Case Study:

A customer visits a construction company to look for the sample flats of its newly constructed residential project. During the visit, the customer trips on the loose flooring and suffers a leg injury. The commercial general liability policy taken by the construction company covers the loss caused due to the medical expenses of the bodily injury of the customer.

Directors and Officers Liability Insurance:

This is a policy that protects the Directors and Officers of a Company by providing indemnity for any loss arising from a claim as a result of a “Wrongful Act” committed while they are carrying out their duties and obligations in their position as Directors or Officers. In today’s litigious environment, Directors or Officers are held personally liable for the management of the affairs of the company.
The exposure is not limited to large Corporations, but Directors and Officers of small and medium Companies are similarly exposed. It is therefore a type of liability insurance which covers the Directors and Officers of a Company against the claims made by:

• Employees
• Suppliers
• Competitors
• Regulators
• Customers
• Shareholders
• Other stakeholders

Case Study:

The dismissal of the four employees of the firm was based on cost-cutting measures, but the female employee filed a suit claiming that a particular director had always discriminated her on the grounds of her gender. However, upon investigation, it was cleared that she was dismissed based on the cost-cutting measure of the firm. Thus, the Directors and Officers liability insurance taken by the firm protected its director against the claims.

Professional Indemnity Insurance:

This policy is used to cover professionals such as Architects, engineers, Doctors, Accountants, Consultants etc. against their professional negligence in the course of their practice.  It covers the compensation claims when the business is sued by its clients for making a mistake.

Case Study:

An investment firm was approached by a client for giving an investment advice. Upon implementation of the advice, the client suffered huge financial losses. The professional indemnity insurance policy covered the investment firm for the losses suffered by the client and helped it to settle the claim.

Cyber Risk Insurance:

A cyber insurance policy is designed to help an organization or business to cover against the liability and property losses arising due to any electronic activity that the business engages in. This policy helps to offset the risk involved with recovery, after a cyber-related security breach.

Case Study:

A dismissed employee of the IT Company stole the names, addresses, social security numbers from the customer files. She gave this information to a fraudulent person who in turn used it to obtain credit cards. The affected customers filed a complaint against the IT Company for their breach of identity. However, the cyber risk insurance policy obtained by the IT firm helped to settle the claims of the customers.

Commercial Crime Insurance:

A Commercial Crime Insurance policy offers to protect the businesses against the losses due to third-party fraud or employee infidelity. It protects the business against:

• Employee dishonesty
• Theft of money
• Burglary
• Robbery
• Forgery
• Computer fraud

Case Study:

An employee of a cable manufacturing company stole bundles of cables from the inventory which was later discovered at a salvage yard. The inventory was found in a damaged state. The commercial crime insurance policy protected the business against the loss caused due to robbery.

Carrier Legal Liability Insurance:

Carrier legal liability insurance covers the insured for the physical loss or damage to goods or merchandise directly caused by fire or/and accident to the vehicle while such goods or merchandise are in transit. It covers for the losses of the goods or merchandise when they are in the custody of the insured.

Case Study:

A transportation company was in the business of transporting assignments of other companies to their destined locations. During one such transit, the goods of a small business owner were damaged due to the accident. However, the carrier legal liability insurance secured by the transportation company helped it to cover the financial loss caused to the business owner.

Product Liability Insurance:

A product liability insurance covers the business against the claims arising with respect to its products and services. The claims may arise due to personal injury or property damage caused due to the products or services of the business.

Case Study:

A paint manufacturer imported the cardboard material required to produce color charts for different paints. However, the finished product of cardboard supplied by the vendor was of a sub-standard quality which caused the final coat of paint to appear a shade lighter. As a result, the paint manufacturer suffered losses and sued the vendor for the same. The product liability insurance policy of the vendor helped him cover the losses.

Trade Credit Insurance:

This insurance helps the business owners to protect their accounts receivable from loss due to credit risks such as protracted default, insolvency or bankruptcy.

Case Study:

A steel company sells a large shipment of raw product to its major client company, who in turn makes other steel products and sells it in the market. In the case where the client company is unable to pay back to the steel manufacturer, due to loss of business, the trade credit insurance policy will cover the steel manufacturers for the portion of the debt.

Medical Malpractice Insurance:

Medical professional liability insurance, sometimes known as medical malpractice insurance, is one type of professional liability insurance which protects physicians and other licensed health care professionals (e.g., dentist, nurse) from liability associated with wrongful practices resulting in bodily injury or death to patients.

Common Types of Medical Malpractice

• Misdiagnosis. Many malpractice cases qualify as misdiagnosis
• Delayed Diagnosis. This form of malpractice is similar to misdiagnosis
• Failure to Treat. Sometimes a doctor arrives at the right diagnosis but fails to recommend adequate treatment
• Surgical Errors
• Birth Injury
• Medical Product Liability