III Exam|IC 74, Liability Insurance|One Liners|Commercial General Liability|Chapter 8
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 8: Commercial General Liability 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 8: Commercial General Liability
- The Commercial General Liability Policy (Cgl Policy) Is A Recent Entrant In Insurance Sphere In India. The Demand Has Arisen With The Globalisation Of The Indian Business Environment.
- Collaborations, Franchisee-Entities and mergers With Foreign Entities More Specifically American and West European Corporations Have Resulted In A Demand For the Product.
- All Collaborations With Indian Co’s And Entities Require The Protection By The Foreign Entity Against Any Legal Liability That May Arise Because Of Breaches Committed By The Local Indian Entity. This Result In Demand For Cgl Policy.
- The Cgl Policy Is A Combination Policy Having Elements Of Property And Casualty Liabilies And Financial Liability Within Its Fold. It Covers Public, Product and Employer Liabilities as Also Financial liabilities.
- Cgl Policies Are Mainly Sold To Customers Having Foreign Collaborations Or Business Entities In Foreign Countries .In India The Product Is Known By Different Names Like:
- Combined General Liability Or
- Common General Liability Or
Commercial General Liability/ All The Names Have Nomenclature ‘Cgl’
- Coverage A: Bodily Injury And Property Damage Liability: This Section Deals With Coverage And Exclusions Pertaining To Liabilities Due To Bodily Injury And Property Damage.
A 1 – Coverage: The Policy Pays If The Insured Is Legally Obliged To Pay Damages For Bodily Injury Or Property Damage Cover Under The Policy Sub To :
- Injury Or Damage Should Be Cause By An Occurrence That Takes Place In The Covered Territory.
- It Should Happen Within The Policy Period.
- The Liability Is Limited To Indemnity Limits As Per Sect. iii Of The Policy.
- This Is A Legal Liability Policy And Negligence Will Have To Be Proved To Claim Damages.
- Under A Public Liability Policy, The Indemnity Provided Is For A Claim Due To Legal Liability Arising Out Of Accident Occurring In The Insured Premises Arising Out Of Injury Or Damage.
- In A Product Policy, The Indemnity Is For Claims Due To Legal Liability Arising Out Of Accidents Arising Out Of Defects In Products Specified In The Pol schedule.
- Cgl Provides Cover For Legal Liability to Pay Damages Because Of Bodily Injury Or Property damages.
- Cgl Also Provides Cover For Supplement Payments Medical Expenses And Fire Damages.
- Coverage Under Cgl Policy Is Restricted To Cover Only Third Party Liabilities Sub To Certain Exclusions-
- Bodily Injury To An Employee, Spouse, Child, Parent, Brother Or Sister Of That Employee.
- Exclude Property Damage To Property Owned, Rented, Occupied By The Insured Or The Property Loaned To Insured Or In The Care, Custody Of The Insured., Also Of Any contractor, Sub-Contractor Working Directly/Indirectly On Behalf Of insured Is Performing Operations, If Property Damage Arises Out Of Those Operations.
- Damage To Insured’s Product Exclusion Which Excludes Property Damage To Insured’s Product Arising Out Of It Or Any Part Of It.
- Damage To Insured’s Work Exclusion Which Excludes Property Damage To Insured’s Work Arising Out Of It Or Any Part Of It Included In The Products Completed Operations Hazard.
- The Insurance Company has The Right and Duty to Defend the Case, Only When The Law Of Lands Permits The Insurance Co. To Defend The Case.
- The Right To Defend The Case Is Also Known As The Duty To Defend Clause. In India Law Does Not Permit Insurers Defending The Case Except Where Statutorily Provided. For Example: Motor Third Party. The Cause Of Action Is Between Insured And The Claimant And Duty Of Defend Is Not Implemented.
- A 2 : Exclusions: Deliberate Damages, Assumption Of Liability In A Contract Or Agreement Is Excluded, Workmen’s Compensation And Employer Liability-Injury Caused To Family Members When Employee Is In Course Of Employment.
- Pollution Liability- It Excludes Injury Or Property Damage Arising Out Of Pollution At Or From Any Premises Owned, Occupied By Or Rented Or Loaned To Insured Except Bodily Injury.
- Coverage B: Personal And Advertising Injury Liability:- B1 Coverage: Coverage Has To Be Specifically Requested. Under This Coverage, The Policy Pays The Amount That The Insured Becomes Legally Liable As Damages Because Of Personal And Advertising Injury Caused By An Offence Arising Out Of Insured’s Business Committed Within Coverage Territory.
- Coverage C: Policy Pays Medical Expenses For Bodily Injury Caused By An Accident With The Covered Territory And Within The Policy Period Provided The Expenses Are Incurred And Reported To Insurers Within One Year Of The Accident. The Injured Will Be Subject To Exam. By Insurer’s Appointed Physicians As And When Required.
- On Premises Owned Or Rented
- On Ways Next To Premises Owned Or Rented
- Because Of Operations
Supplementary Payments – Coverage A and B:-
- Under This Coverage, The Insurers Will Pay For All Expenses Incurred By Them In Investigation, Defence And Settlement Of Suits Including: Bail Bond Up to A Limit For Traffic Violations Or Accidents Arising Out Of Use Of Vehicles To Which Bodily Insured Coverage Applies. Reasonable Expenses Incurred By Insured On Request Of Insurer To Assist In Investigation Or Defence Including Loss Of Earning Upto A Per Day Limit. Costs Taxed Against Insured In The Suit. Prejudgement Interest Awarded Against Insurers.
These Payments Will Not Reduce The Limits Of Insurance.
- Coverage Under These Sections Is Restricted In Indian Market . It Is Usual To Prescribe A Maximum Limit In Cases Where Coverage Under This Section May Be Sought. The Limit Will Apply Within The Overall Aggregate Limit Stated In The Schedule.
- The Cover Provided Under This Section Is Usually For Defence Of Indemnitee And Costs Invovled In Investigation And Collection Of Infomation For The Suit.
Cgl Policy Clasues: Section II – Who Is An Insured:-
Insured With Respect To The Conduct Of Business Is Defined As Under
- If Individual Is Sole Owner Of Business, Individual & Spouse Are Insured In Partnership Or Joint Venture, Partnership Or Joint Venture & Partners, Members And Their Spouse Are Insured.
- In Case Of Limited Liability Company, The Limited Liability Company And The Manger Are Insured.
- In Case Of Any Other Organisation, The Organization, Its Executive Officers And Directors And Stockholders Are Insured.
- In Case Of Mobile Equipment Registered In Insured Name Being Driven In Public Place With Insured Permission, The Liability Is Covered For:
- Any Person Driving Such Equipment Or
- Organisation Responsible For The Conduct Of Such Person If They Do Not Have Any Liability Coverage For Such Operations.
- Coverage Will Commence After 90 Days Or The End Of Policy Period, Whichever Is Earlier.
- The First Named Insured Being The Organization Entitled To Most Benefit Of The Policy. The Employees And Other Entites Coverage Is Restricted Under Various Sections.
Cgl Policy Clauses: Section III- Limits Of Insurance
- The Limit Of Insurance Payable Under The Policy Is The Maximum Liability Of The Insurer Irrespective Of Nos Of
(a) Insured (b) Claims Made Or Suit Brought (c)Persons Or Organisations Making Claims.
- Master Control Program Aggregate: Is The Maximum Claim Payable Under The Policy.
- General Aggregate Limit: Is The Maximum Payable In Respect Of Damages Under Coverage A Excluding Bodily Injury Or Property Damage Included In The Products Completed Operations Hazard, Damage Under Coverage B And Medical Expenses Under Coverage C
- Products Completed Operations Aggregate Limit: Is The Maximum Payable Under Coverage A For Damages Because Of Bodily Injury And Property Damage Included In The Products-Completed Operations Hazard.
- Personal And Advertising Injury Limit: Is The Maximum Payable Under Coverage B.
- Each Occurrence Limit Is The Maximum Payable For The Sum Of Damages Covered Under Coverage A And Medical Expenses Under Coverage C Because Of Bodily Injury And Property Damage Arising Out Of One
- Premises Rented To Insured Limit Is The Maximum Payable Under Coverage A For Damages Because Of Property Damage To Any One Premises Rented To Insured.
- Medical Expenses Limit Is The Maximum Payable Under Coverage C For All Medical Expenses Because Of Bodily Injury Sustained By Any One Person.
- Cgl Policy Clauses: Section IV Conditions:
- Bankruptcy: Of Insured Does Not Absolve Insurer Of Their Obligations Under The Policy.
- Duties In The Event Of An Occurrence, Claim Or Suit:
- Immediate Notice With Details Of Occurrence Of Event, Injured Persons & Witness And Nature Of Injury Or Damage.
- If Insured Receives A Claim, Notify The Insurer Of Claim Received.
- Forward Copies Of All Demands, Notices, Summons
- Authorize Insurer For Collection Of Additional Information, Cooperate For Investigation, Assist And Enforce Rights Against Person Or Organizations.
- No Offer Admission Or Payment To Be Made Without Insurer Consent.
- Notice Of Non-Renewal Will Be Given By Insurer A Minimum 30 Days Before Expiry Proof Of Mailing Will Be Sufficient.
- Cancellation: 10 days notice In Case Of Non Payment of Premium And In All Other Cases 60 Days Notices Shall Be Given. Proof Of Mailing Is Sufficient Proof.
Cgl Policy Clauses: Section V – Definitions:
- Advertisements Refers To A Notice That Is Broadcast Or Published To The General Public Or Specific Market Segments About The Insured Goods, Products Or Services For The Purpose Of Attracting Customers Or Supporters.
- Auto Means A Land Motor Vehicle, Tailor Or Semitrailer Designed For Travel On Public Road, Incl. Any Attached Machinery or Equipment. But Not Mobile Equipment.
- Bodily Injury Means Bodily Injury, Sickness Or Disease Sustained By A Person Incl. Death Resulting From Any Of These At Any Time.
- Coverage Territory: Means The Territory Specified In The Schedule.
- Employee: Is Permanent Employee Or Contract Employee
- Executive Officer: Means A Person Holding Office As Per Company Law
- Hostile Fire: Means One Which Becomes Uncontrollable Or Breaks Out From Where It Was Intended.
- Impaired Property: Means Tangible Property Other Than Insured Product Or Work.
- Insured Contract Means: A Contract For Lease Of Premises. However It Does Not Include The Part Of The Contract That Indemnifies The Landlord Or Owner Of The Property For Fire Damage To The Premise Leased To Or Temporarily Tenanted By The Insured.
- Leased Worker: Is A Person Leased To You By A Labour Leasing Firm Under Agreement To Perform Duties Related To The Insured’s Conduct Of Business.
- Loading Or Unloading: Means Movement Into Or Onto An Aircraft, Watercraft Or Auto, Whilst In Such Craft Or Whilst Being Moved From Such Craft. It Does Not Include Movement By Means Of A Mechanical Device Other Than Hand Truck Not Attached To Such Craft Or Auto.
- Local Underlying Policy: Means A Primary Policy Effective On Or After The Inception Of This Policy Which Has Been Issued At Insurers’ Direction Or Coordinated Specifically For This Insurance Program.
- Mobile Equipment: Means Land Vehicles Including Attached Machinery Or Equipment Like Bulldozers, Forklifts Used On Private Land, Power Cranes, Road Construction Or Resurfacing Equipment Crawlers Or Other Vehicles That Are Self propelled. As Also Air Compressors, Pumps Generators Spraying Welding Any Equipment Not Used For Carriage Of Persons Or Cargo.
- Occurrence:: Means An Accident Including Continuous Or Repeated Exposure To Substantially The Same General Harmful Conditions.
- Personal And Advertising Injury : Means Injury, Including Consequential Bodily Injury Arising Out Of The Following Offences:
- False Arrest, Detention Or Imprisonment
- Malicious Prosecution
- Wrongful Eviction From Or Entry Into Or Invasion Of The Right Of Private Occupancy Of A Room, Dwelling Or Premises That A Person Occupies, Committed By Or On Behalf Of Its Owner Or Landlord Or Lessor.
- Oral Or Written Publication Of Material That Slanders Or Libels A Person Or Organisation Or Disparages A Person Or Organisation’s Goods ,Products Or Services.
- Oral Or Written Publication Of Material That Violates A Persons Right Of Privacy.
- The Use Of Another’s Advertising Idea In One’s Advertisement
- Infringing Upon Another’s Copyright, Trade Dress Or Slogan In Ones Advisement.
- Pollutants: Mean Solid, Liquid ,Gaseous Or Thermal, Irritants Or Containant Including Smoke, Vapour Soot, Fumes, Acids Alkalis, Chemicals And Waste. Waste Includes Materials To Be Recycled, Reconditioned Or Reclaimed.
- Products – Completed Operations Hazard: Includes All Bodily Injury And Property Damage Occurring Away From Premises Insured Owns Or Rents And Arising Out Of The Product Or Work Except:
- Products That Are Still In Physical Possession Of Insured Or
- Work That Has Not Been Completed Or Abandoned. Excludes Bodily Injury Or Property Damage Arising Out Of:
- Transportation Of Property Unless Out Of A Condition To The Vehicle Which Is Not Owned Or Operated By The Insured And The Condition Was Created By The Loading Or Unloading Of The Vehicle By The Insured.
- The Existence Of Tools, Uninstalled Equipment Or Abandoned Or Unused Material.
- Products Or Operations For Which The Classification, Listed In The Declarations Or In A Policy Schedule, State That Products-Completed Operations Are Subject To The General Aggregate Limit.
- Property Damage Means: Physical Damages To Tangible Property Incl. An Arbitration Proceeding For Such Injury Or Damage Or An Alternative Disputes Resolution Proceeding For The Same Purpose.
- Temporary Worker: Is A Substitute For Seasonal Or Short Term Work Conditions.
- Terrorism: Means The Unlawful Use Of Violence Against Persons Or Property To Further Political Objectives And Which Is Intended To Intimidate Or Coerce A Govt. Individual Or Persons To Modify Their Behaviour Or Politics.
- Product: Means Goods Or Products, Other Than Real property, Manufactured, Sold, Handled, Distributed Or Disposed By Insured Or Trading Under Insured Name Or Insured Acquired Business Or Assets And Includes Containers, Material Parts Or equipment Furnished In Connection With Such Goods Or Products.
- `Work Means The Work Or Operation Performed By Or On Behalf Of The Insured.
- Proposal Form: Is Must For This Insurance-Details-Name, address, Details Of Premises, Insured activities, Turnover Figures, Details Of Products Mfg Or Supplied, Quality Control Information, Past Insurance, Claim History Etc.
- Rating: The Premium Is Charged On Indemnity Limits And Risk Exposure.
- Deductible: The Policy Is Subject To A Deductible For Each Section.
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