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.