Page 23 - Insurance Times February 2016

Continued from last issue : Underwriting Liability Insurance - Process, Principles and Perspectives

UNDERWRITING
LIABILITY
INSURANCE -
PUBLIC LIABILITY
INSURANCE (ACT
POLICY)

Introduction: liability exists either in express or implied terms in the
contract.
Public Liability Insurance covers the legal Liability of the
Insured towards the damages to the third party for death/ Again contractual liability arising out of breach of contract,
injury/ diseases (including illness) and property damage due if any, is confined to the stipulated amount of damages,
to accidents happening up to the limits specified in the which the parties to the contract take care or can get
policy. The liabilities which are covered by public liabilities prepared to manage with their proper plan of action while
are mainly liabilities in tort, which are governed by the the risks of tort liability arising out of negligence or mistake
common law. which may lead to court award for unlimited damages
cannot be tackled or handled with any preplanned action
Liability may arise either from breach of contract, from tort except by proper liability policy.
or from liabilities imposed by statute. Public liability policy
does not cover any contractual liability. The basic distinction Tort implies some breach of duty -general duty of care which
between contractual liability and tort liability is that breach lies on all of us to ensure that no injury or no property
of contract is a violation of a right arising out of an damages is caused to men around us. Law of tort or Common
agreement or promise, whereas tort is a breach of duty law implies that each and everyone owes duty to his fellow
which a person owes to his fellow men who suffer bodily men and therefore everyone is required to regulate his
injury or property damages. Legal liability due to breach of actions to avoid injuries to others or damage to their
contract arises only in those cases where contractual property. So each and everyone in trade, commerce or any
economic activity in the society is required to take public
CA. R C Guria liability policy to manage liability risk exposures to public.

CA, FIII, M.COM. Thus a Public Liability Insurance protects the insured who
WBA&AS (Ex) EX-CRM would be legally liable to pay as damages to third parties
New India Assurance Co. Ltd. for bodily injury including death, loss or damage to the

The Insurance Times, February 2016 23

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