Originally, individual companies that faced a common peril formed a group and created a self-help fund out of which to pay compensation should any member incur loss (in other words, a mutual insurance arrangement).
The modern system relies on dedicated carriers, usually for-profit, to offer protection against specified perils in consideration of a premium.
Manufacturing, meanwhile, comprises a lower share of liability claims as accidents related to injuries and property damages have declined.
Typically governed by civil law systems, these markets rely on local conditions and historical experience to determine which liability policies and covers are available.
This is due to the country’s English law derived legal framework, which has increased demand for employers’ liability insurance.
China is the ninth largest commercial liability market globally, with premiums of USD 3.5 billion in 2013 and strong annual average growth of 22% since 2000.
An indemnity case arises when an individual is obliged to pay for the loss or damage incurred by another person in an event of an accident, collision etc.
Most policies provide for payment of monetary damages as well as any costs, expenses, and attorney's fees which the plaintiff may also be entitled to as the prevailing party.
Unlike the duty to defend, the duty to indemnify extends only to those claims or causes of action in the plaintiff's complaint which are actually covered under the policy, since a final judgement against the insured would normally be supported by a factual record in the trial court showing exactly why the plaintiff prevailed (or failed to prevail) on each claim or cause of action.
[11] If the first outcome occurs, then it is essentially "nothing gained nothing lost" from the insurer's point of view, because either way it will pay out its policy limits.
If the first outcome above were to occur, the insured may be held liable to the plaintiff for a sum far in excess of both the pretrial settlement offer and the policy limits.
In other words, it was thought that no sane plaintiffs' lawyer would sue in 1978 for a tortious act that allegedly caused a covered loss in 1953, because the risk of dismissal was so obvious.
In the 1970s and 1980s, a large number of major toxic tort (primarily involving asbestos and diethylstilbestrol) and environmental liabilities resulted in numerous judicial decisions and statutes that radically extended the so-called "long tail" of vulnerable policies.
Policyholders started to argue that losses began to occur not only at the time of a plaintiff's diagnosis or the belated discovery of underground pollution, but from the time a plaintiff received the first of many cumulative exposures to a toxic substance or when the defendant initially released pollutants, and that such losses continued to keep occurring through every subsequent policy period (though they did not ripen into lawsuits until much later).
They also force insureds to become more proactive about risk management and finding ways to control their own long-tail liability.
Or they can wait until they actually get sued, but then they run the risk that the claim will be denied because it should have been reported back when the underlying accident first occurred.
[18] One way for businesses to cut down their liability insurance premiums is to negotiate a policy with a retained limit or self-insured retention (SIR), which is somewhat like a deductible.
Public policy therefore requires that such individuals should carry insurance so that, if their activities do cause loss or damage to another, money will be available to pay compensation.
Such policies fall into three main classes: Industry and commerce are based on a range of processes and activities that have the potential to affect third parties (members of the public, visitors, trespassers, sub-contractors, etc.
A company owning an industrial facility, for instance, may buy pollution insurance to cover lawsuits resulting from environmental accidents.
Many small businesses do not secure general or professional liability insurance due to the high cost of premiums.
Those with the greatest public liability risk exposure are occupiers of premises where large numbers of third parties frequent at leisure including shopping centres, pubs, clubs, theatres, cinemas, sporting venues, markets, hotels, and resorts.
In some cases underwriters even refuse to insure the liability of these industries or choose to apply a large deductible in order to minimise the potential compensations.
For example, a rotten branch may fall from an old tree and injure a pedestrian, and many people ride bicycles and skateboards in public places.
Many also require insurance companies to provide a default fund to offer compensation to those physically injured in accidents where the driver did not have a valid policy.
These risks may include bodily injury or property damage caused by direct or indirect actions of the insured.
There are two exceptions to this rule: Because technology companies represent a relatively new industry that deals largely with intangible yet highly valuable data, some definitions of legal liability may still be evolving in this field.
Technology firms must carefully read and fully understand their policy limits to ensure coverage of all potential risks inherent in their work.
Covered incidents may include errors and omissions that result in the loss of client data, software or system failure, claims of non-performance, negligent overselling of services, contents of a forum post or email of an employee that are incorrect or cause harm to a reputation, getting rid of office equipment such as fax machines without properly clearing their internal memory, or failing to notify customers that their private data has been breached.
For example, some client companies have won significant settlements after technology subcontractors’ actions resulted in the loss of irreplaceable data.