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With increased globalization the need for liability insurance is gaining importance. Be it manufacturing unit or a service industry, every industry segment is exposed to liability claims. With increased awareness of one’s rights, the number of such claims has increased many folds over the years. With Globalization such types of claims, has crossed the geographical limits. Apart from the huge outgo in such types of claims, a huge amount is spent on the litigation process, thereby crippling the company’s financials. As such it becomes all the more vital to be properly equipped to fight such unwelcome situations.
We at Birla strive not only to arrange the liability insurance, but before that try and understand the type of exposure to liability claims. Whilst advising the best suitable liability programme to cater to the client’s overall needs, we also make sure that the carrier of this programme is the best one to handle such types of liability claims. Of course it is a well known fact that the quality product comes at a price and so does the liability insurance. However, in today’s market of cut-throat competition we try to maintain a good balance between a good price and a good product.
There are various types of policies available in the market catering to the different needs of the industry. Given here below is a brief synopsis of the same:

Public Liability Act Policy – Required by the industries dealing with hazardous substances listed in Public Liability Insurance Act, 1991. The limits as prescribed in the law for the insurance are, per accident minimum of Paid up capital subject to maximum Rs.5 crores and annual limit is 3 times of per accident limit subject to maximum of Rs.15 crores. An amount equal to that of premium is charged which is deposited in the Environment Relief Fund managed by Authority appointed by the Central government.
Public Liability (Industrial & Non industrial ) Policy – Conventional product offering cover against the liability claims falling on the Insured for legal liability to third parties, on account of bodily injury or property damage arising out of Insured’s business operations. The Policy can also be extended to cover Food & Beverage extension, Goods kept in care and custody, Industrial pollution cover, Act of god perils cover, other facilities etc. The general exclusions under this policy are product liability, professional liability, personal injuries like slander, libel, fines, exemplary damages etc. The premium under the policy generally depends on the limits of liability selected per accident and per year, apart from the turnover, type of industry and number of locations, the surroundings of the locations.
Product Liability – Legal liability cover for the liability claims by third parties, on account of the bodily injury or property damage arising out of Insured’s products. The usual extensions available under the Policy are Vendors’ liability, Technical collaborators clause. The Vendors liability clause takes care of all such types of liabilities, which would fall on the Insured on account of liability incurred for the product or part of the product which is outsourced by him. The Policy generally excludes product recall, product efficacy, and product guarantee besides other common exclusions under the liability policies. Again the premium depends on the turnover, areas of operations, type of products, quality control measures at clients level, amongst various other underwriting considerations, which may change from the company to company.
Commercial General Liability – A Comprehensive cover offering combination of Public liability and Product liability cover with many additional cover. The Policy ideally covers liabilities arising out of Insured’s premises, or operations and also products manufactured, sold or distributed by the Insured. The additional covers available under the policy include, personal and advertising injury, medical expenses, product completed operations, damages to rental premises, vendors clause, additional Insured as declared by the Insured, accidental pollutions. The information required by the Insurers to fix the premium price would be the limits of liability selected, the turnover, the type of products, quality control measures, areas of operations, the surroundings of the Insured premises amongst various other information required.
Errors & omission / Professional Liability - Legal liability cover for the liability claims by third parties, on account of the bodily injury or property damage arising out of services offered or which should have been offered by the Insured as a part of their profession. The policy is ideal for all those engaged in service industry, including medical practitioners, architects, engineers, software firms etc. The underwriting consideration varies according to the type of services offered apart from the limit of indemnity selected. However the policy does not cover the contractual liabilities, criminal acts, deliberate or willful neglect and fines & penalties amongst other general exclusions.
Directors & officers Liability – A legal liability protection for the Company’s directors and Officers against the liability claims lodged on them for the wrongful acts done in their official capacity. The Policy covers parent company along with its subsidiaries and former, present and future directors. The policy primarily does not cover, liabilities arising out of criminal wrongs, prior or pending litigations, infringement of intellectual property rights. The policy also does not cover the directors who are the major shareholders of the Company. The policy can be extended to cover outside entity directors, Regulatory Crisis response cover, Kidnap response cover, Emergency costs etc. While underwriting consideration for arriving at the premium varies from company to company, a general market condition of the company, capital structure of the company and the company credentials looked into apart from the proposal form and annual reports of the company and subsidiaries.
Workmen compensation Insurance – The Policy covers liabilities falling on the employers for death or injury sustained by his employees who falls in the category of `workman’ as defined in the Workmen Compensation Act. The Policy covers statutory liability as well as liabilities arising under Common Law. The employees not falling under the definition of `workman’ can be covered under the Common Law. The Policy primarily includes the liabilities towards the employees, whilst on work. Medical expenses can also be covered at the Insured’s options. The indemnity payable under the policy is compensation awarded by the WC court as structured in the WC Act, along with the legal costs. The premium depends on the annual wages disbursed to the employees and the type of work the employee is engaged in.

The above list is not exhaustive and the cover can be arranged with individual company’s overall requirements.
Following are the typical features of all the Liability policies:

The Liability policies have per incidence limit and a per year limit, which can vary in the range of 1: 1, 1: 2, 1: 3, 1: 4 ratios. The limits are to be selected by the Insured depending on their anticipated exposure.
All the liability policies are subject to completion of proposal forms.
The jurisdictional and geographical limits can be opted by the Insured as with India, Worldwide (excluding US & Canada) and Worldwide including US & Canada
The liability policies do not cover fines and penalties, and contractual liabilities beside much other general exclusion.
All the liability policies include defense costs and such other costs incurred by the Insured with prior consent of the insurers.
The liability policies are generally on claims made basis or on occurrence basis. While the claims made basis policies cover only those losses known and reported by the Insured during the policy period or extended policy period, the occurrence based policies cover all those losses falling within the policy period coming to the knowledge of the Insured even after expiration of the Policy period.
All the claims made policies have a RETROACTIVE DATE and this date is the one from which date, the liability policy is in place without any gap in insurance. This date ensures the continuity of cover for all such losses, which might come to Insured’s knowledge much after expiration of the policy or extended policy period.
All the liability policies are subject to excess i.e. a portion of the claim amount which the Insured needs to bear for himself.