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Chapter L4 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:
• Employees’ compensation compensates the insured in respect of their legal liability to pay damages
to any employee arising out of bodily injury, disease, illness or death received in the course of
employment by the insured.
• Public liability insurance compensates the insured 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.

L5 Engineering insurance

Engineering insurance may be linked to risks associated with the construction, installation or
malfunctioning of property or machinery. Examples are as follows:
• Contractors’ all risks is frequently taken out in commercial centres that see a significant volume of
construction. It protects the contractor or employer against all damage to materials and work for the
duration of the contract.
• Erection all risks covers the risks involved in the erection and installation of machinery or equipment,
such as water treatment facilities and TV aerials, rather than their construction.
• Machinery breakdown covers unforeseen and sudden breakdown or accidental damage to plant,
which is generally grouped under the following headings: boilers and pressure plant, engine plant,
electrical plant, lifting machinery, miscellaneous plant and computers. Many of these items need to be
inspected regularly by a competent person as a legal requirement. Consequently, inspection contracts
often accompany these covers.
• Boiler explosion covers the explosion of a boiler or pressure plant while in the course of ordinary
working. It includes damage to third-party property and the death or injury of third parties.

L6 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.
• 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.

L7 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.