Why you need Liability Insurance

This type of insurance policy is generally procured by companies or individuals who may be held liable, legally for injuries or other issues. This especially the case for hospitals, doctors, or even business owners.

 

An example would be, if a product manufacturer sells products that have been faulty or cause damage to other’s products, then he/she may be sued for the damages caused.

 

Procuring liability insurance will cover the manufacturer from ensuing legal costs.

Liability insurance is one part of the general insurance policy itself under the risk transference category. 

 

In many countries, liability insurance is mandatory especially for drivers of public transport vehicles. The scope of this form of insurance in India has been defined by the Public Liability Insurance Act of 1991.

 

Liability Insurance Plans:

  • Public Liability Insurance
  • Product Liability
  • Employer Liability
  • Third-Party Liability
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How is the Premium Amount Decided?

The premium that is to be paid by the insured will be worked out using the base rate based on the insurance company’s needs and assessments. 

 

Another factor that is taken into consideration is the amount of risk that the company and its products come with. The higher the risk, the higher is the premium to be paid.

 

Claim history, size of the risk, and the company’s approach to the risk are additional factors.

 

While deciding the premium amount, insurance companies take into consideration the environment, the number of claims made previously, and their business record.

 

Companies Providing Liability Insurance Policy are:

Several companies within India provide different forms of liability insurance covers. Some of these are –

 

  • HDFC Ergo Commercial General Liability – this insurance policy protects against claims of property damage or bodily injury for which the company is liable.
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  • ICICI Lombard offers numerous liability insurance covers to suit business requirements.
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  • Bharti AXA Commercial General Liability Policy offers cover for liabilities that are a result of business processes and operations.
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Liability Insurance Claim Process:

The claims process varies from one company to the other. There is generally a form to be filled for the same post which all necessary documents will have to be provided.

 

However, when it comes to liabilities it is not as simple. There may be court cases or an out-of-court settlement. 

 

The claims process will be different based on what the claim is being made for.

 

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Garvit Chaharia is the Founder of Deeva Ventures & has helped more than 10,000 investors manage their Wealth, by providing disciplined advisory on Portfolio Management, Risk Management & Debt Management.