Liability Insurance
Property insurance covers what you own. Liability insurance covers what you might owe someone else — and in a claim, the legal costs of defending yourself often matter as much as the award itself.
Placed by Naveen Kumar Pandey, IRDAI-licensed insurance agentNo consultation fee
What this actually is
Commercial general liability covers third-party injury or property damage arising from your premises or operations — a customer hurt in your shop, damage caused by your staff at a client's site. Product liability extends that to harm caused by a product after it has left you.
Professional indemnity covers claims of negligence, error or omission in professional advice or services. It is the relevant cover for consultants, architects, doctors, accountants and IT service providers, where the damage caused is financial rather than physical.
Directors and Officers liability protects the personal assets of directors and senior managers against claims arising from their decisions in that role. Crime insurance covers loss from employee dishonesty and fraud, and cyber insurance covers data breach, ransomware, business interruption from an attack and the notification and legal costs that follow.
Almost all liability policies are written on a claims-made basis: the policy that responds is the one in force when the claim is made against you, not when the act happened. That makes continuity of cover, and the retroactive date, unusually important.
Key facts
- Our appointment
- Bajaj Allianz General Insurance, agency code BAG10104147
- Commercial general liability
- Third-party injury and property damage from premises and operations
- Product liability
- Harm caused by your product after sale
- Professional indemnity
- Negligence, error or omission in professional services
- D&O
- Protects directors' and officers' personal assets for decisions made in that role
- Basis
- Usually claims-made — continuity and the retroactive date matter
This suits you if
- Manufacturers and anyone selling a physical product
- Consultants, professionals and service firms
- Companies with a board, outside investors or independent directors
- Any business holding customer data or dependent on IT systems
- Businesses contractually required to carry liability cover
How it works, step by step
Map the exposures
Who could sue you, for what, and how large could it realistically be. That decides which sections you need.
Set limits per claim and in aggregate
Liability policies carry both. The aggregate is the total for the year, and it can be exhausted by several claims.
Fix the retroactive date
On a claims-made policy this determines how far back covered acts can have occurred. Keep it as early as possible.
Disclose known circumstances
Anything you already know might become a claim must be declared. Concealment voids the cover.
Notify early at claim time
Report a claim, or even a circumstance that might become one, as soon as you become aware. Late notification is a common reason cover is refused.
What you will need
- Business registration and GST details
- Details of activities, products or services
- Annual turnover, and export turnover separately
- Claim history for the last few years
- Existing policy details, to preserve the retroactive date
Do not have all of it to hand? Send what you have — we will tell you what is still needed.
What can go wrong
Every product has a downside. Here is this one's, in plain language, before you decide anything.
- Insurance is the subject matter of solicitation. Read the policy wording before concluding a sale.
- Claims-made cover responds only if a policy is in force when the claim is made. Let it lapse and past years' work becomes uninsured.
- Deliberate acts, known circumstances not disclosed, and contractual penalties are excluded.
- Aggregate limits can be used up by earlier claims in the same policy year, leaving nothing for a later one.
- Defence costs may sit inside the limit rather than on top of it — which one applies changes the value of the cover considerably.
- Cyber policies vary enormously between insurers. Ransom payment, business interruption and regulatory fines are not always included.
Questions people ask us about this
What does claims-made actually mean?
The policy that pays is the one in force on the day a claim is made against you, not the one in force when the mistake happened. So if you stop buying cover, work you did in earlier years stops being protected. Continuity is the whole point.
I am a one-person consultancy. Do I need this?
If a client could suffer a financial loss from your advice and come after you for it, professional indemnity is worth pricing. Many corporate and government contracts now require it before they will engage you at all.
Does cyber insurance cover a ransomware payment?
Sometimes, but not always, and cover varies widely between insurers. Business interruption, forensic costs, notification costs and regulatory defence are separate heads too. This is a policy to read clause by clause rather than to buy on price.
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Still deciding?
Ask us anything about this product — including how we are paid on it. We will answer straight.