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Chapter L1C Motor insurance

Insuring motor vehicles and liabilities arising out of their use is the most significant compulsory
insurance in many countries. The principal types of motor insurance are motor insurance, motorcycle
insurance, commercial motor insurance and motor trade insurance.
Larger risks are considered very much on their own claims history and are termed fleet-rated risks.

L1D Liability insurance
This is insurance to cover the legal liability to pay compensation and costs awarded against the
policyholder in favour of another party, in respect of death, injury, disease, loss or damage sustained by
that party. Examples are as follows:

• Employers’ liability insurance compensates an employer for their legal liability to pay damages to any
employee arising out of injury, disease, illness or death in the course of employment. Like motor
insurance, this is compulsory in many countries.
• Public liability insurance compensates the policyholder for claims from third parties (i.e. members of
the public or companies) for accidental bodily injury or damage to their property due to negligence.
• Product liability insurance covers the legal liability for third party bodily injury or property damage
caused by products, goods or services sold or supplied.
• Professional indemnity insurance protects a person acting in their professional capacity against
claims that might be made alleging that injury or loss has resulted from negligent actions or advice.
L1E Marine and aviation insurance

Marine
Marine insurance covers three main areas of risk: physical damage to the ship or goods (cargo),
liabilities incurred to other parties and loss of income.
• Marine hull insurance covers physical damage to the ship, its machinery and equipment and some
limited liability insurance in case of contact with other vessels.
• Marine cargo insurance covers loss or damage to goods. Reference copy for CII Face to Face Training
• Marine freight insurance covers the sum paid for transporting goods or for vessel hire.
Aviation
Aviation insurance covers both loss of or damage to the aircraft (hull) and legal liability to third parties
and passengers (liability). Specialist covers such as aviation products and personal accident policies for
aircrew are also insured in the aviation market. However, aviation cargo is covered under a marine
policy. Satellite insurance is a specialised branch of aviation insurance.

L1F Combined or packaged policies

A combined or packaged insurance policy is one that brings together a number of different types of cover
or a range of risks/perils under one policy.
• Household insurance covers buildings and/or contents (usually on a ‘new for old’ basis) against
a wide range of perils, including fire and theft. Valuables and personal effects are also covered,
as is public liability cover. A number of optional extensions are available including accidental
damage cover.
• Travel insurance covers individuals travelling within a country or overseas, either for a defined trip or
for a specified period. Such insurance would cover injury, death, medical expenses, loss of luggage/
personal possessions/money and cancellation charges.
• Commercial package policies are marketed under a variety of trade names and designed to provide a
range of covers automatically for particular trades, e.g. shopkeepers, hoteliers, hairdressers. The cover
is relatively inflexible and it would not be possible to exclude different sections. The packaging has
been carefully researched so that the majority of those in the particular trade are catered for at
favourable rates.
• Commercial combined policies provide comprehensive business cover in a single policy and are
primarily for small businesses, engineers, manufacturers and wholesalers. A cost-effective way to
safeguard all aspects of business risk and tailored to individual company needs, commercial
combined policies typically include cover for burglary and theft, employers’ liability, public and
products liability, business interruption, stock and goods in transit and money either held on the
premises or by an authorised employee.