III Exam|IC 74, Liability Insurance|One Liners|Chapter 1

III, Optional Subjects|IC 74, Liability Insurance|One Liners|Chapter 1

The Liability Insurance (IC – 74) is a paper in III exam  for Non Life Insurance. The Liability Insurance (IC 74) is a optional paper and it comprises of 30 Points. This is the most important paper in III Examination, and most people prefer this paper.
This paper comprises of 100 Multiple Choice Questions. Aspirants need to score 60% in this paper to qualify for Licentiate.

We are providing Chapter 1  – Introduction To Liability Insurance one-liners of this paper practice of Non Life Insurance (IC – 74) which will be very important from exam point of view. This one-liners is very easy to understand.

♦CHAPTER 1: Introduction To Liability Insurance

• Legal Liabilities Is The Legal Responsibilities Of A Person To Pay Compensation For Any Damages Incurred, Are Determined By Court Even If They Settle Mutually Outside The Court.
• Criminal Liability:- It Is Enforced By The State, Resulting Into Punishment In Form Of Fine Or Imprisonment Or Both
• Civil Liability :-Action Is Brought By One Party Against Another & Dealt With According To Law, Resulting In Payment Of Damages Or Compensation To The Aggrieved Party.
• Insurance Is Provided Only For Civil Liability Claims, Any Liability Arising Out Of Criminal Act Cannot Be Covered Under Insurance.
• Civil Liability: Arise Under Common Law May Be Defined As A Body Of Law Consisting Of Past Court Decisions, Customs And Usages Recognized By Courts.   Also Arise Under Statory Law Under Act Of Parliament.
• Workmen, S Compensation Act 1923, The Employer, Irrespective Of His Negligence May Be Liable To His Employee Who Meets With An Accident Whilst At Work.
• Public Liability Insurance Act, 1991 Insured Handling Hazardous Has No Fault Liability (Liability Irrespective Of Negligence) For Accidents Occuring During Such Handling.
• Liability May Also Arise Under A Contract Between Two Parties.
• Insurance Covering Statutory Liability I.E. Liability Defined By A Specific Law
• Workmen, S Compensation Act, Motor Vehicle Act, Indian Steamships Act ,                 Public Liability Act
• Insurance Covering Tort Liability I.E. Common Law Judgments
• Public Liability, Professional Liability, Product Liability

Liability Insurance Is Classified As :-

1. Property And Casualty Liability -Act Of Negligence Resulting In Loss Or Damage To Property Or Property Or Death Or Injury Of Third Party Or
2. Financial Liability I.E. Negligence Resulting In Financial Losses To Third Parties E.G. Professional Liabilities, Directors And Officers Liabilities Etc.

• Liability Insurance Is To Provide Indemnity To The Insured In Respect Of Financial Consequence Of Legal Liabilities. The Damages or Compensation May Become Payable When ever Any Such Liability Arise Under The Law.
• Public Liability Insurance 1st Originated In The U.K. In 1875,When 1st Pol Was Issued To Cover Liability To Third Parties Arirsing Out Of The Use Of Horse Driven Vehicles. 1876 Boiler Policies By Engineering Office To Include Damage To Surrounding Property. This Was Followed By Third Party (Lift) Pol. Were Issued In 1888.
• The Employers Liability Assurance Corporation Ltd. Founded In 1880, 1st Co. To Transact Liability Business.
• In 1880 Passing Of Employers Liability Act ,Created Demand For P.L. Policies
• The National Insurance (Industrial Injuries)Act, 1946, Was Passed Following The Beveridge Report In 1942, Recommends Inclusion Of Provision Of Industrial Accident Or Disease.
• The Employers, Liability(Compulsory Insurance)Act,1969 Became Operative  From 1.1.1972.Act Required To Have Compulsory Insurance For Employer In Great Britain., For Bodily Injury Or Disease, Arising Out Of And In Course Of Their Employment.

Liability Insurance In India

• Workmen,S Compensation Act,1923  And The Motor Vehicles Act, 1939,                      Bhopal Tragedy 1984, Environment Protection Act 1986,The Consumer Protection Act 1986, Public Liability Insurance Act,1991
• Employers State Insurance Act,1948, The Indian Contract Act, 1872
• Basic Principles-Insurance Interest, Indemnity, Subrogation, Contribution, Utmost Good Faith
• The Principle Of Indemnity In Liability Insurance-Protection Against The Financial Consequence Of Legal Liability.

Scope Of Liability Insurance-

• Act Policy Under P.L. Insurance Act
• Public Liability Policy For Industrial And Non-Industrial Risk
• Products Liability Policy
• Combined General Liability Policy
• Professional Indemnity Liability Policy
• Employers Liability Policy
• Directors And Officers Liability Policy
• Other Liabilities

Liability Policies Are Also Issued– Motor, Marine Hull And Aviation Insurance.

Extensions Of Liabilities Cover Are Also Available Under Material Damages Policies – Contractors Risk, Erection Risks, Boiler Explosion

Special Featers Of Liabilities Insurance Policies:-

• Claims Paid To Persons Other Than Insured
• It Provides Indemnity To The Insured In Respect Of His Potential Legal Liability I.E. Liability Arising Under Common Law Or Statutory Law
• Claims Are Negotiated And Settled With The Consent Of Insurer, Including Legal Costs Incurred With Written Consent Of Insurer
• Instead Of Sum Insured There Is Limit Of Indemnity Is Stated In General Liability Policy.
• Cause Of Action May Arise Anywhere In World But Insurer Restrict Their Liability To Courts Within Specific Jurisdictions.

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