III Exam |IC 74, Liability Insurance |One Liners |Errors And Omissions Liability Policy| Chapter 10
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 10 : Errors And Omissions Liability Policy 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.
♦Errors And Omissions Liability Policy
- Errors And Omission Policies Are Issued To Host Of Professionals Training From Quality Certifying Agencies To Software Developers, Advertising Agencies, Stock Brokers And The Whole Gamut Of New Age Professionals.
- There Is No Standard Wording For Such Policies. Professional Indemnity Policies Is Used With Amendments To Incorporate Acts Of Errors And Omissions Resulting In Injuries Or Loss Of Damage. The Element of Negligence May or May Not Be Present. It May Be Noted That These Liabilities Have Not Yet Been Tested In Indian Court Of Law.
- Coverage: These Policies Cover Breach of Professional Duty Due To Errors or Omission Committed Or Occurring In Good Faith And Resulting In Loss Or Damage To Others. Legal Costs Are Included Within The Overall Limits Of Indemnity.
- The Policy Are Primarily On Claims Made Basis And Retroactive Dates Are To Be Negotiated.
- Exclusions: Deliberate Or Willful Acts, Dishonesty Or Fraudulent Acts, Libel Or Slander, Fines And Penalties, War Or Radiation Risks, Acts Occurring Prior To Inception Of Policy.
- Conditions: Common To Professional Policies Apply here. In Addition The Policy May Incorporate The Duty To Defend Clause Enabling The Insurer To Take Over The Defence Of The Case.
- Deductible: A Specified Percentage Of The Limit Of Indemnity Or A Fixed Amount.
- Proposal Form: There Is No Standard Form. Insurer May Call For Details Of Documents To Ascertain The Risk And Exposure To Decide The Cover.
- Rating: The Premium Is Normally Applied On The Indemnity Limit And The Turnover.
Clinical Trial Liability Policy:
- Clinical Trial Are Medical Research Studies Involving People. It Is Done To Test The Efficacy And Safety Of A Drug On Humans. This May Be Done On Healthy Volunteers Or Patients Suffering From A Disease For Which The Medicine Is Being Tested.
- Phase I : Safety Of The Treatment– It Is The First Stage Of Testing On Humans And Involves A Group Of Around 20 Healthy Persons. The Testing Is On The Safety Of The Treatment And Its Appropriate Dosage And Documentation The Side Effect If Any.
- Phase II: Workability: This Involves A Large Group Of Around 300 Persons Who Are Having The Disease Or Medical Condition For Which The Medicine Is Being Tested. In This Stage, Safety And Effectiveness Is Tested.
- Phase III: Comparison With Existing Treatment: This Is Carried Out On A Group Of 1000 Persons From Across The World. Efficacy And Effectiveness is Further Tested At Various Centres. Effect Is Compared With Commonly Used Treatments And Information Is Collected Towards Obtaining Marketing Approvals For Drug.
- Phase IV: Body Of Knowledge Establish: This Is Done After The Drug Obtains Marketing Approval. This Is Done For Monitoring Of The Efficacy And Effectiveness Over Long Term Usage.
- Liability During Clinical Trials: There Are Multiple Stakeholders Involved In A Clinical Trial Like:
- The Sponsor Whose Product Is Being Tested
- Contract Research Organisation (Co) Who Monitor The Trial
- Principal Investigator Or Doctor Who Conducts The Trial
- The Hospital/Institution Where The Trial Is Conducted
- Ethics Committee That Approves The Trial And Has To Ensure The Safety Of The Subject.
- Coverage: The Policy Covers The Sum Which Insured Shall Be Liable To Pay As Damages/Compensation For Claims Made By Subjects For Death Or Inquiry Or Any Other Adverse Reaction In The Body As A Result Of Participation In Clinical Trial. The Term Insured Would Include All Stakeholders In The Trial. The Cost Includes Legal Costs Also. Breaches Of Data May Also Be Covered.
The Policy Is Generally Issued On No Fault Principle.
- The Policy May Be A Single Trial Or Multi Trial Policy. Post Trial Coverage Is Also Offered For A Limited Period As Decided.
- Proposal For And Rating: The Protocols Of The Clinical Trials, The Particulars Of All Agencies Involved In The Process, Their Experience & Past Insurance And Claims History Are Obtained For The Purpose Of Insurance.
- Premium Rates Are Based On Track Record Of The Sponsor, Whether Single Trial Or Multiple Trial Policy, The Phase Of Trials Involved, Numbers Of Subjects, Their Age, Details Of Drug Etc.
Other Liability Policies:
- Cybercrime Liability: It Has Helped In Globalization Of Economic Activity And Business, It Has Also Opened Avenues For Crime Beyond National Borders And Multiplication Of Liabilities As A Consequence.
- Some Of The Cyber Liability Exposures Are Liable, Hacking, Inadvertent Virus Transmission, Copyright Infringement, Loss Of Identity.
- Policy Cover Liabilities Arising Out Of Hacking Email Frauds, Web Developing, Website Maintenance And E-Commerce.
- Stockbrokers Liability: Stock Brokers Can Be Liable For Wrong Advice To Clients And Also Failure To Execute Or Wrong Execution Of Clients’ Instruction To Trade.
- One Of The Conditions For The Coverage Is That They Are Registered Members Of A Stock Exchange.
Overseas Practices In Liability Insurances:
- K. Practices: A Notable Feature Of U.K. Practice Is Combined Or Comprehensive Policies Which Include Coverage For Public Liability, Products Liability And Employers Liability.
- Large Business Groups Which Operate In Many Countries Have Special Insurance Problems. They May Have To Arrange Local Insurance As Per Local Laws. Nevertheless, The Group Head Office May Arrange A ‘Global Policy’ To Cover Any Gaps In Local Insurance Coverage Or On An ‘Excess Of Loss’ Basis To Take Care Of Losses.
- Market Pools Formed By A Consortium Of Insurers Are Not Very Common In Liability Insurance Except Perhaps In Extra -Hazardous Risk E.G. Demolition Contracts. However Public Liability Insurance For Nuclear Reactor Operators Is Available On A Pooling Basis From The ‘British Insurance (Atomic Energy) Committee Comprising The Insurance Companies And Lloys’s Underwriters.
- Pollution Coverage: The Practice Varies Among Insurers. Some Incorporate A General Exception In The Public Liability Policy; Other Consider Each Risk Separately And Decide To Cover Or Exclude Pollution Liability.
- Limit Of Idemnity For Any One Year Of Insurance.
- All Pollution Or Contamination Which Arises Out Of One Incident Shall Deemed To Have Occurred On The Date That Insured First Became Aware.
- Products Guarantee Policy: The Special Exclusion In The Product Liability Policy Relate To Product Damage, Product Repair Or Replacement Product Recall, Product Guarantee And Product Performance.
- Legal Liability Arising Out Of Failure Of Products To Fulfil Their Intended Function.
The Policy Will Pay For:
- The Cost Of Repairing Or Replacing A Defective Product
- The Cost Of Recalling Defective Products
- The Financial Losses Caused By Such Products Where There Is No Injury To Or Damage To Property Of Third Parties.
- Product Liability Law: In Many Developed Countries, Liability For Defective Products Is Now Governed By The Legal Principle Of ‘Strict Liabilities’ I.E. Irrespective Of Negligence. This Law Is Particularly Applied In Many States In USA.
- The Council Of European Communities Issued A Directives In 1985 To Introduce Strict Liability Law For Defective Products. In Compliance With The Directive Consumer Protection Act, 1987 Was Passed In The U.K. According To The Act, A Claimant Is Not Required To Prove Negligence Against A Manufacturer.
- If There Is Defect In A Product If The Safety Of The Product Is Not Such As Persons Generally Are Entitled To Expect And Safety In Relation To A Product Shall Include Safety In The Context Of Risk Of Death Or Personal Injury Or Of Damage To Property.
- Similar Legislation Is Introduction In Denmark, Germany, Italy Etc.
- Professional Indemnities: In The U.K. Mutual Insurance Schemes Are In Operation. For The Medical Professional, The Medical Defence Union And The Medical Protection Society Cover Their Members Against Professional Liability On A Subscription Basis. The Law Society Has A Mutual Scheme To Cover Their Member Solicitors. Solicitors Are Obliged To Effect Compulsory Professional Indemnity Insurance Under The Provisions Of Solicitors Act,1974.
- Insurance Brokers Must Be Registered With Insurance Brokers Registration Council ,Insurance Brokers Registration Act 1977.
- Employers Liability Insurance Is Compulsory Under The Employers Liability (Compulsory Insurance) Act 1969 Operative From 1st January,1972.
- USA Practice: The Policy Commonly Used To Insure A Wide Range Of Liability Loss Exposure Of Most Organisation Is The -Commercial General Liability (Cgl) Policy.
- A Business Owners Policy Is A Simplified Property And Liability Package Policy Designed For Small To Medium Sized Business.
- Homeowners Property Liability Package Policy Is Designed For Homeowners.
- Farm Liability Under Specially Designed Property Liability Package Policy.
- The COVERAGE APPLIES TO LIABILITY ARISING OUT OF FARMING ACTIVITIES INCLUDING PRODUCTS LIABILITY.
- Liquor Liability Policy: Is Designed For Manufacturers Distributors etc Of Alcoholic Beverages. The Policy Covers The Liability Excluded Under Cgl Policy.
Pollution Liability Policy:
- Nuclear Energy Liability Insurance Is Provided By Various Pools Formed By Insurers.
Two Types Of Coverage Are Available:
- The Facility Form For Operators Of Nuclear Facilities And The Suppliers
- Transporters Forms For Those That Provides Services, Material Etc. For Such Facilities Or Transport Property To And From A Facility.
- The Coverage Is Restricted To Liability Arising Out Of Nuclear Accidents Only. Thus, These Need Also Cgl Policy.
- Workmen’s Compensation Policy: Workers’ Compensation Laws Are Adopted Separately By Each State. Covers Occupation Injury Or Illness Of Employees, Irrespective Of Negligence. Employers Can Also Claim On The Basis Of Negligence. Both Types Of Claims Are Covered Under Worker’s Compensation And Employers’ Liability Insurance.
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