This publication summarises the essential elements of a contract of insurance. It looks at the ways in which public liability may be incurred and how the policy should be structured to respond to this liability.
The book analyses the main policy clauses (recital clause, operative clause and proviso clause) and also looks in detail at exceptions, policy conditions and extensions to basic policy cover.
The appendices contain a number of public liability insurance policy wordings and summarise relevant case law.
Chapter 1. Legal principles – summary of policy
Chapter 2. The recital clause
Chapter 3. The operative clause
Chapter 4. The proviso clause
Chapter 5. Exceptions – risks covered by other policies
Chapter 6. Exceptions – risks covered by other policies (continued) – product liability and professional indemnity insurance
Chapter 7. Exceptions – risks outside the scope of the policy – uninsurable risks – excess clause
Chapter 8. Policy conditions
Chapter 9. Extensions to basic policy cover
Chapter 10. Economic loss
Appendix A Public liability policy
Appendix B Sun Alliance International liability insurance proposal
Appendix C Sun Alliance International liability policy
Appendix D Colonia-Baltica Insurance Management Limited liability policy
Appendix E Reliance National Insurance Company (UK) Limited pollution legal liability policy
Appendix F Association of British Insurers – Statement of General Insurance Practice
Appendix G List of cases
Appendix H Precis of cases
Introduction to First Edition
One of the main purposes of insurance is to allow people to carry on their business or private affairs in the knowledge that, should they suffer loss or damage to their property or incur a liability to pay damages to a third party, their insurer will bear the expense involved: they will be indemnified. This is particularly important in the context of third party liabilities where the financial consequences of an accident could be well beyond the means of the person or company responsible. The highest award for damages for personal injury at the time of writing is £1,200,000 (Harrop v Fernandez (1989)). Claims and awards for damages resulting from pollution incidents or professional negligence are far in excess of this figure.
We are all, therefore, at risk of incurring liabilities which could not be met without insurance, and policyholders pay premiums into a fund from which claims are met. Insurers calculate premium rates by reference to previous claims experience, so that those engaged in activities giving the highest risk, whether by frequency or potential size of claims, pay the highest premiums.
Many accidental events are potential claims under public liability policies although they may not appear to be so at first sight. Most accidents have a cause and should this be attributable to fault or breach of a legal duty by any party, that party would probably incur a liability for which the public liability policy may provide an indemnity. Naturally such a policy is subject to certain conditions and exclusions, a consideration of which will be the subject of the major part of this book.
A number of cases are referred to in the text and appendices to illustrate important points or to assist the reader in understanding development in the law as they affect the public liability policy. Some of these cases, in particular those that are of fundamental importance to the law of insurance, also appear in other books in this series. It is emphasised, however, that there is no substitute for reading the full reports and judgements of those cases and any others dealing with the same topic. Case report references are therefore given in Appendix C [now Appendix G].
CILA
The Chartered Institute of Loss Adjusters (CILA) is a globally recognised membership organisation for claims professionals. The Institute sets the professional and ethical standards for those who work in the handling of claims through its qualification framework and guide to professional conduct.
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