Page 48 - The Insurance Times February 2026

Consumers

Do’s and Don’ts While Buying a Liability Insurance

Policy

DO’s (What You Should Do) This distinction is critical, especially for professional and
D&O liability policies.
1. Clearly Identify Your Liability Exposure
Assess the nature of your operations or profession: 5. Check Retroactive Date and Extended Reporting
Y Public interaction risks
Period
Y Professional advisory risks For claims-made policies:
Y Employer–employee liabilities Y Ensure the retroactive date covers past work.
Y Product or environmental exposure Y Consider extended reporting period (tail cover)
The policy must align with your actual risk profile, not upon policy exit or closure.
generic assumptions.
6. Review Coverage of Legal Defence Costs
2. Choose the Right Type of Liability Policy Confirm whether:
Common liability covers include: Y Defence costs are included within the sum insured,
or
Y Public Liability
Y Defence costs are payable over and above the limit
Y Professional Indemnity
Y Employers’ Liability Y This can significantly impact claim adequacy.
Y Product Liability 7. Disclose All Material Information
Y Directors’ & Officers’ Liability Full disclosure of:
Y Nature of business
Selecting the correct policy type is more important than
opting for a higher sum insured. Y Past claims or incidents
Y Turnover, contracts, and jurisdictions
3. Assess the Sum Insured Adequately
Non-disclosure can lead to claim repudiation.
Liability claims can escalate due to:
Y Court awards
DON’Ts (What You Should Avoid)
Y Legal defence costs
1. Don’t Buy Liability Insurance Only to Meet Con-
Y Compensation inflation
tractual Compliance
Choose a sum insured based on worst-case exposure, Many policies are purchased merely to satisfy tender
contractual obligations, and industry benchmarks. or contract requirements, without evaluating actual risk
exposure. This often results in inadequate or mis-
4. Understand the “Claims-Made” vs “Occurrence” matched coverage.
Basis
Y Claims-made policies respond only if the claim is re- 2. Don’t Ignore Policy Exclusions
ported during the policy period. Common exclusions include:
Y Contractual liabilities
Y Occurrence policies respond based on when the
incident occurred. Y Intentional acts

The Insurance Times February 2026 43