Public liability insurance—basic insurance principles
Public liability insurance—basic insurance principles

The following Insurance & Reinsurance practice note provides comprehensive and up to date legal information covering:

  • Public liability insurance—basic insurance principles
  • Public liability insurance contracts
  • Insuring clause
  • Terms
  • Limitations
  • Premium
  • Third party claims

Public liability insurance contracts

Insuring clause

Public liability insurance indemnifies a policyholder’s liability in respect of personal injury, death or damage to third party property. It is relevant to consumers, but is more commonly obtained by businesses.

As with most types of liability policy, public liability insurance will typically cover defence costs incurred in connection with claims against the insured in addition to any liability for damages. An insured’s right to recover under a liability policy arises when its liability has been ascertained by judgment, arbitration award or binding settlement agreement.

Terms

A public liability policy normally contains restrictions of liability by reference to the type of business carried on by the insured. Where a statement by the insured as to the methods used in carrying on that business is incorporated in the policy, the insurers may not be liable if an accident occurs while methods other than those stated are being used. Product liability policies frequently seek to exclude cover for contractual, as opposed to tortious, liability.

Limitations

As would be expected, insured parties must carefully review any limitations of liability contained in a policy. Policies are often limited by reference to a maximum sum payable in respect of any one accident. What is an accident (or

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