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Liability Insurance

liability insurance is brefily mentioned as per law of insurance

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36 views3 pages

Liability Insurance

liability insurance is brefily mentioned as per law of insurance

Uploaded by

ryan rooker
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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LIABILITY INSURANCE

-Just as a person insuring his life and property against risk, he can also insure himself against the
risk of incurring liability to third parties.
-Liability policies are generally expressed as providing indemnity against liability in law ie, legal
liability.
-This risk must be separately and specifically insured and that comes within the category of
liability insurance.
-Different types of liability insurance are:
a. Public liability insurance
b. Liability arising out of professional negligence c. Compulsory insurance d. Employer’s
liability insurance e. Guarantee insurance

PUBLIC LIABILITY INSURANCE


-It does not mean the liability of the state or its agencies, but liability imposed by law.
-It is similar to that of a self-imposed liability in a contract.
-There is a separate act enacted in the year 1991 called as public liability act, 1991 for this
purpose alone.
-This act is intended to provide immediate relief to the persons affected by accidents occurring
while handling any hazardous substance and matters connected therewith and incidental thereto.
-BHOPAL GAS LEAK CASE was a major reason for enactment of this act.
-The growth of all such kinds of industries brings the risk of accidents within it.
-These accidents apart from causing harm to the employees also cause harm to the innocent
people loving in and around the surrounding.
-These accidents may also cause damage to public and private property.
-The only remedy available to the victims are litigation.
-Some industries do not have the financial resources to compensate the victims.
-In such cases comes up the importance of public liability insurance.
-Thus, public liability insurance has been made mandatory.
-SEC.3 of the act provides that where death or injury to any person other than workman or
damage to any property has been caused by the accident the owner shall be liable to compensate
as prescribed in the schedule.
-The section also provides that the claimant need not prove or establish that the damage or death
was due to any wrongful act or negligence.
-Public liability insurance also includes no fault liability.
-SEC.4 of the act imposes duty on the employer to take insurance policy before he starts
handling any hazardous substances.
-Whenever it comes to the notice of the collector about such an accident, he shall verify the
occurrence and give publicity for inviting applications from persons:
a. Who have sustained injury
b. Owner of the property which sustained damage c. Legal representatives of the deceased from
the accident d. Any duly authorized agent or representative of the person -On receipt of
applications after giving notice to the owner reason and reasonable opportunities to be heard an
inquiry will be conducted into the claim.
-After inquiry an award determining the amount of claim which deems fit to him will be made.
-After such am award is made the insurer who is liable to pay the amount within 30 have to
deposit the amount as the collector may direct.
-The relief under this act does not affect the right of the claimant to claim for any compensation
in respect if death, injury etc.
-This act is an addition to any other right that can be claimed by him.

LIABILITY ARISING OUT OF PROFESSIONAL NEGLIGENCE

-This provides cover to professional people fir any negligence in the course of their profession.
-Importance of these policies increased after the landmark decision in HEDLEY BYRNE & CO
VS. HELLER and PARTNERS in which it was held that in some circumstances duty of care
could be owed by those professionals who made statements that are intended to be relied upon.
-In M. VEERAPPA VS. EVELYN SEQEVIS Supreme Court held that no legal practitioner will
be exempted for any loss or damage caused due to his negligence in the conduct of his
professional duties.
-This induced a new form of insurance as professional negligence insurance.
-In India the most prevalent form of professional negligence indemnity is of medical negligence.

COMPULSORY INSURANCE

-For welfare of employees it has been made compulsory for the employers to insure the safety of
the workman.
-Employees state insurance act 1948 makes it mandatory.
-It makes compulsory for the employer to insure his workmen by providing certain benefits to
them in the event of sickness, maternity and employment insurance.
-Under this act a corporation of constituted to administer.
-The corporation has a central board, standing committee, medical benefit council and a court of
its own.
-The central board consists of representatives of central and state government, employers,
workers and of medical profession.
-The standing committee acts as the executive of central board and medical council gives advice.
-Employees state insurance courts decide disputes and adjudicates on claims.
-The employees insured under the act and their dependents shall be entitled to a. Sickness
benefit: In case of a sickness certified by a duly appointed medical practitioner periodical
payment based on certain qualifications and conditions.
b. Maternity benefit: Periodical payment to an insured woman certified to be eligible for such
payment by an authority specified in case of miscarriage, sickness arising out if pregnancy,
premature delivery.
c. Disablement benefits: Periodical payment to an insured person who is suffering from
disablement as a result of employment injury certified by an authority under this act.
d. Dependents benefit: Payments to dependents of an insured who dies as result of employment
injury.
e. Medical benefit: Expenses incurred for medical treatment and attendance on insured person.
f. Funeral expenses: payment of the funeral expenses of the insured.
-Premiums of these policies are paid by the contributions from the employers and workmen.

EMPLOYERS LIABILITY INSURANCE


-With the development of industrial and labor welfare measures and legislations the liability of
the employee was also considerably extended.
-This is a form of cover which insures against liability for bodily injury or disease sustained by
the employee arising out of due course of employment.
-various enactments such as factories act, workmen’s compensation act etc. impose a duty on the
insured to percent personal injuries to his employees arising out of and in the course of
employment.
-The insurance company contracts to pay claim for damages against the employees.
-These policies are also governed by the general principles of insurance.

GUARANTEE INSURANCE

-This type of insurance is a recent origin and gaining its popularity in modern times.
-Formerly the process guarantee was given by a friend or relative or anyone for a debt incurred.
-As the number of business started increasing it was difficult to find sureties or guarantor.
-There came the idea of guarantee insurance business.
-There are two methods by which this guarantee is given:
a. The insurance company stands as a surety.
b. The promisee is being insured against the loss arising out of nonpayment.
-A contract of guarantee is a contract to discharge the liability of a third person on case of his
default.
-Contract of guarantee insurance is a contract whereby the insurer undertakes to indemnify the
loss caused as a result of breach of contract or infidelity(breach of trust).
-Contract of guarantee insurance types are:
a. Insurance for completion of contract:
-The subject matter of insurance is due performance of contract.
-In case the contract is not completed insurance company is liable.
-So here it is a compensation for breach of contract.
b. Insurance for repayment of debts:
-A creditor may insure the life of the debtor for repayment.
-In case of default in payments the creditor can make a claim from the insurance company.
c. Fidelity policies:
-These policies are usually made for a term of one or more years.
-This usually arises in cases of employment where the employee has a chance to be dishonest.
-If the employee commits any fraud or dishonest action then the insurer can be made liable.

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