Chapter 14 Commercial Liability Insurance

1
Commercial Liability Insurance
2
A general liability policy provides coverage for
both products liability and completed operations.
Both products liability and completed
operations loss exposures are included in a
definition called products- completed operations
hazard.
3
This term refers to bodily injury and property
damage liability losses that occur away from the
premises and arise out of the insured's product
or work after the insured has relinquished
possession of the product, or the work has been
completed.
4
For example, assume that a gas water heater is
improperly installed and explodes one month
later. The loss is covered under the
products-completed operations hazard.
5
General liability refers to the legal liability
of business firms arising out of business
operations other than liability for automobile or
aviation accidents or employee injuries.
6
The most important general liability loss
exposures are as follows a. premises and
operations b. products liability c.
completed operations d. contractual liability
e. contingent liability
7
Products liability refers to the legal liability
of manufacturers, wholesalers, and retailers to
persons who are injured or incur property damage
from defective products.
8
Completed operations refer to liability arising
out of faulty work performed away from the
premises after the work is completed.
9
Contractual liability means that the individual
or business firm agrees to assume the legal
liability of another party by a written or oral
contract.
10

• Contingent liability means the firm can be held
  liable for work done by independent contractors.
• A firm can be held liable for work performed by
  independent contractors when
• the activity is illegal
• it is a situation that does not permit
  delegation of authority or
• the work is inherently dangerous.

11
An occurrence policy is one that covers claims
arising out of occurrences that take place during
the policy period, regardless of when the claim
is made. In contrast, the claims-made policy
only covers claims that are first reported during
the policy period, provided the event occurred
after the retroactive date (if any) stated in the
policy.
12
The business auto coverage form can be used by
business firms to insure liability loss
exposures from automobiles. The employer can
select those automobiles to be covered under the
policy. In addition, the firm has a choice of
physical damage coverages that can be used to
insure covered autos against damage or loss.
Nonownership liability exposures can also be
covered under the policy, which covers the firm
if employees should injure someone while driving
their cars on company business.
13
The garage coverage form includes liability
insurance, garagekeepers insurance, and
physical damage insurance. Garagekeepers
insurance covers the garage owner's liability for
damage to customers' automobiles while they are
in the garage owner's care for service or
repairs.
14
Commercial umbrella policies have certain common
features. The liability insurance is excess
over any basic underlying coverages that may
apply. Also, the umbrella policy covers many
losses not covered by the underlying contracts,
subject to a deductible or self-insured
retention. Finally, the contract provides broad
coverage for bodily injury liability, property
damage liability, and personal injury and
advertising liability.
15
The major features of a professional liability
policy, such as that designed for physicians,
surgeons, and dentists, are as follows a. The
insuring agreement provides broad coverage. b.
Liability is not restricted only to accidental
acts. c. The insured is protected against the
negligent acts of employees.
16
d. There is a maximum limit per medical
incident and an aggregate limit for each
coverage. e. Professional liability insurance
is not a substitute for general liability
insurance. f. Current forms permit the insurer
to settle the claim without the insured's
consent. g. An extended reporting period can
be added.
17
(No Transcript)