ImageCommercial Liability Insurance - Types of Liability Insurance Policy

The Benefits of Liability Insurance Policy

Product Features

Pays for any litigation cost against any official or key employee. Protects directors and other key executives from various litigation costs. Necessary to embolden executives to work without fear of any kind of litigation. Covers any kind of litigations.

Professional Indemnity

Pays for litigation related to alleged negligence in service. Relevant for all services companies and individual professionals such as doctors, architects and chartered accountants. Conduct your business without worrying about acrimonious litigation.

Comprehensive General Liability

Pays for third party claims in your premises or claims due to your products. Covers both public and product liability. Public liability covers litigation by third parties hurt on your premises. Product liability covers damages caused by products that you manufacture.

Specific Liability Risks

These insurances are specific to select industries. Carrier Legal Liability protects fleet owners and transporters. Cyber Risk most applicable to companies dealing in online customer information. Commercial Crime relevant to financial services companies amongst others.

Quick Guide to Liability Insurance Policy

Definition of Commercial Liability Insurance

A commercial liability insurance is designed to protect your business and would pay for any legal liability that may force you to payout a huge compensation for damage or injury caused to a third party by virtue of your business’ day to day operations. A commercial liability insurance is essential for all the companies that involve in manufacturing or development or physical as well as software products to protect its clients, customers and employees.

Types of Commercial Liability insurance

There are essentially two types of commercial liability insurance policies, i.e., financial liability and casualty lines. Financial lines cover legal liability arising from financial loses of the third party. The casualty lines of product cover legal liability arising from property damage and bodily injury of third-parties.

Below are some illustrative products within financial and casualty lines:

Financial lines:

Casualty lines:

Benefits of Commercial Liability insurance

  • Covers legal costs - Liability insurance cover takes care of legal expenses when you have to defend yourself. These costs can rapidly mount up. In some insurances the insurer also has a duty to defend which makes them responsible for taking up the law suit. Generally, insurers are also a good source of identifying competent lawyers and preparing a defense strategy.
  • Meets contractual obligations - Business partners increasingly require you to purchase liability insurances to do business with them. This is true of companies overseas and increasingly, in India. Liability insurances meet all these contractual requirements. These insurances can also be modified to include your customer’s name as an additional insured.
  • Cover across countries - A well placed liability insurance will cover you for legal costs in any country. This becomes important when you have customers or operations outside of India. Often, litigation will take place in a foreign country. This is expensive and you may not have the market knowledge of how to defend yourself there.
  • Cover for compensation awarded by the court – A liability insurance not only covers for any legal costs that the insured party is liable to payout; it also covers for the payouts or the compensation as awarded by the court when the insured is found liable for the damage caused to the third-party.

Exclusions under Commercial Liability insurance

Exclusions for commercial liability insurance vary with insurers. However, some of the common types of exclusions are below:

  • Deliberate attempts or intentional damages caused to a third-party including clients, vendors and customers
  • Compensation for damages related to pollution
  • Contractual liabilities are not covered
  • Work and employee related perils
  • Claims arising due to wars or riots
  • Criminal act and dishonest claims

Note: This is not an exhaustive list, your policy copy will contain details of all the exclusions under your specific liability insurance policy.

Documents Required for Commercial Liability insurance

Below is the list of documents required while filing a claim for commercial liability insurance:

  • ID proof of the insured and the claimant
  • Copy of policy document
  • FIR report, if any
  • Notice served by the third party
  • Supporting documents for type of claim, extent of loss, loss location and so on
  • Additional documents as required by the insurance company

Frequently Asked Questions

One example of a liability insurance can be: if a product manufacturer sells defective products, unintentionally, and that causes harm to the consumers then they can sue the manufacturing unit. In return, the manufacturing company can claim for a liability insurance to protect their business and their finances.
A commercial general liability insurance is a type of liability insurance that covers a business for liabilities arising due to bodily injury, personal injury and/or property damage caused by the business to another entity.
Exclusions in a liability insurance varies by product type. For example, a D&O insurance would exclude bodily injury and property damage whereas a commercial general liability would cover this. Some common exclusions across all liability insurances include:
  • Willful or gross negligence
  • Intentional harm
  • Criminal or fraudulent acts
  • Acts committed before the policy inception
  • Insuropedia

    A Brief Guide To Commercial General Liability Insurance

    The commercial general liability insurance policy offers protection to business owners by covering the defense cost and other legal costs arising due to third party liability and product liability claims. It also provides coverage against premises liability claims arising due to injury or damage.[...]
    Read More

    What is the importance of retroactive date in liability insurance?

    The retroactive date in a liability insurance policy is either –
    • Date from which you have held uninterrupted insurance cover (despite changing insurers on renewal) or
    • Date from which your insurer has agreed to provide

    The retroactive date in liability insurance is important because it determines how far back in time an incident can occur for your policy to still protect you.[...]

    Read More

    Liability insurance is offered as an add-on with home policies

    We made a claim on our family health insurance, which we have been renewing for the past 10 years, in 2016 for my husband’s appendix operation. There were no claims before or after that. Will the subsequent years in which no claim was made be eligible for no-claim bonus[...]
    Read More

    Search Insuropedia - Enter Your Question.

    Why SecureNow?

    Deep Product Knowledge

    We have specialized underwriters and tie-ups with international experts.

    Cost-effective Insurance

    We work with all insurers to get you the best options- both in terms of price and features.

    Quick Turnaround Time

    Cover notes are issued within hours of request. This documentation is sufficient for any contractual requirement.

    Strong Claims Support

    We manage all aspects of your claim - from preparing documentation to follow-up with the insurer.

    Value-Added Services

    We will advice you on risk management best practices.

    Policy Administration System (PAM)

    See all your contracts renewal information in one place. Place service requests on PAM.