insurance viva

8/9/2019 Insurance Viva

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Chetana Hazarimal Somani College of

Commerce and Economics

BANKING AND INSURANCE

Liability Insurance, Errors and Omission,

Kidnap and Ransom.

Group no. 002

Group members

NAME ROLL.NO

Ashwini 207

Jonathan Fernandes 208

Gaurav Gharat 209

Jash 210

Harsha 211

Sonal 212


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Liability

Insurance


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LIABILITY INSURANCE

Liability insurance is a part of the general insurance system of risk

financing. Originally, individuals or companies that faced a common peril

formed a group and created a self-help fund out of which to pay compensation

should any memberincur loss. The modern system relies on dedicated carriers to

offer protection against specified perilsin consideration of a premium. Liability

insurance is designed to offerspecific protection against third party claims,i.e.,

payment is not typically made to the insured, but rather to someone suffering

loss who is not a party to the insurance contract. In general, damage caused

intentionally and contractual liability is not covered under liability insurance

policies. When a claim is made, the insurance carrier has the right to defend the

insured. The legal costs of a defense are not always affected by any policy limits,

which is useful because they can be significant where long trials are held to

determine either fault or the amount of damages. Overview of liabilityinsurance.

In many countries, liability insurance is a compulsory form of insurance for

those at riskof being sued by third parties for negligence. The most usual classes

of mandatory policy cover the drivers ofvehicles, those who offer professional

services to the public, and those who manufacture products that may be harmful,

constructors and those who offer employment. The reason forsuch laws is that

the classes ofinsured are deliberately engaging in activities that put others at risk

of injury or loss. 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. In addition, there are a further

range of perils that people insure against and, consequently, the number and

range of liability policies has increased in line with the rise of contingency fee

litigation offered by lawyers (sometimes on a class action basis). Such policies

fall into three main classes:


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PUBLIC LIABILITY

Industry and commerce are based on a range of processes and activities that havethe potential to affect third parties (members of the public,visitors, trespassers,

sub-contractors, etc. who may be physically injured or whose property may be

damaged or both). It varies from state to state as to whether either or both

employer's liability insurance and public liability insurance have been made

compulsory by law. Regardless of compulsion, however, most organizations

include public liability insurance in their insurance portfolio even though the

conditions, exclusions, and warrantiesincluded within the standard policies can

be a burden. A company owning an industrial facility, for instance, may buy

pollution insurance to cover lawsuits resulting from environmental accidents.

Manysmall businesses do not secure general or professional liability insurance

due to the high cost of premiums. However, in the event of a claim, out-of-

pocket costs for a legal defense orsettlement can far exceed premium costs.

[1] In some cases, the costs of a claim could be enough to shut down a small

business.

[2]Businesses must consider all potential risk exposures when deciding whether

liability insurance is needed, and, ifso, how much coverage is appropriate and

cost-effective.

[3]Those with the greatest public liability risk exposure are occupiers of

premises where large numbers of third parties frequent at leisure including


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shopping centers, pubs, clubs, theaters, sporting venues, markets, hotels and

resorts.

The risk increases dramatically when consumption of alcohol and sporting

events are included. Certain industries such as security and cleaning are

considered high riskbyunderwriters. In some casesunderwriters even refuse to

insure the liability of these industries or choose to apply a large deductible in

order to minimize the potential compensations. Private individuals also occupy

land and engage in potentially dangerous activities.

For example, a rotten branch may fall frogman old tree and injure a pedestrian,

and many ride bicycles and skateboardsin public places. The majority ofstates

requi

re motoris

ts

to carryinsu

rance and crim

inal

ize tho

se who dr

ive w

itho

ut a

valid policy. Many also require insurance companies to provide a default fund to

offer compensation to those physicallyinjured in accidents where the driver did

not have a valid policy. In many countries claims are dealt with under common

law principles established through a long history of case law and,if litigated, are

made by way of civil actionsin the relevant jurisdiction. For example, in North

Korea, those found without proper liability insurance face punishment ranging

from seizing of property, flogging, or political exile.

Product liability insurance

Product liabilityinsurance is not a compulsory class ofinsurance in all countries,

but legislation such as the UK. Consumer Protection Act 1987 and the EC

Directive on Product Liability (25/7/85) require those manufacturing or

supplying goods to carry some form of product liability insurance,usually as

part of combined liability policy. The scale of potential liabilityisillustrated by


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casessuch as those involving Mercedes-Benz forunstable vehicles and Perrier

for benzene contamination, but the full list covers pharmaceuticals and medical

devices, asbestos, tobacco, recreational equipment, mechanical and electrical

products, chemicals and pesticides, agricultural products and equipment, food

contamination, and all other major product classes.

Employers liability insurance

New policies have been developed to cover any liability that might be imposed

on an employerif an employee isinjured in the course of his or her employment.

In manystates, the insurers are prohibited from including conditions within their

policies that seek to impose anyunreasonable conditions precedent to liability,

or require the insured either to take reasonable precautions or to comply with

current legislation and regulations. In those countries where such insurance is

not compulsory, smaller organizations are often driven into bankruptcy when

faced by claims not covered by insurance. Many of the public and product

liability risks are often covered togetherunder a general liability (or umbrella")

policy. These risks may include bodily injury or property damage caused by

direct orindirect actions of the insured.

Rules regarding liability insurance

Where the carrying of a policyis not mandatory and a third party makes a claimfor injuries suffered, evidence that a party has liability insurance is generally

inadmissible in a lawsuit on public policy grounds, because the courts do not

want to discourage parties from carrying such insurance. There are two

exceptions to this rule:


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1. If the owner of the insurance policy disputes ownershi p or control o f the

property, evidence of liability insurance can be introduced to show that it is

likely that the owner of the policy probably does own or control the property.

2. If a witness has an interest in the policy that gives the witness a motive or bias

with respect to specific testimony, the existence of the policy can be introduced

to show this motive or bias.

Federal rules of civil procedure rule 26 was amended in 1993 to require that any

insurance policy that may pay or may reimburse be made available for

photocopying by the opposing litigants, although the policies are not normally

information given to the jury. Federal Rules of Appellate Procedure rule 46 says

that an appeal can be dismissed or affirmed if counsel does not u pdate their

notice of appearance to acknowledge insurance.

DIRECTORS AND OFFICERS LIABILITY INSURANCE

Directors and Officers Liability Insurance: -(often called D&O)is

liability insurance payable tithe directors and officers of a company, or to the

organization(s)itself, to cover damages or defense costsin the event theysuffer

such losses as a result of a lawsuit for alleged wrongful acts while acting in their

capacity as directors and officers for the organization. Such coverage can extend

to defense costs arising out of criminal and regulatory investigations/trials as

well; in fact, often civil and criminal actions are brought against

directors/officerssimultaneously. It has become closely associated with broader


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management liability insurance, which covers liabilities of the corporation as

well as the personal liabilities for the directors and officers of the corporation.

[1]Typical sources of claimsinclude shareholders,shareholder-derivative

actions, customers, regulators, and competitors (for anti-trust or unfair trade

practice allegations).

Directors and officers of corporation can be liable if they damage the

corporation by breaching their duties and contracts to the corporation, mix

personal and business assets, or fail to disclose conflicts ofinterest. In the United

States, however, corporations are often required by law, particularlystate law, to

indemnify directors and officers in order to encourage people to take the

positions. Liabilities which aren't indemnified byte corporation are covered by

D&O insurance.

[2] However, the policies have exclusions and must bread carefully.Directors and Officers Liability insurance is commonly purchased with a

companion product "Corporate Reimbursement Insurance" (or "Company

Reimbursement Insurance"). When purchased together, single insurance policy

is normally issued which is entitled "Directors and Officers Liability and

Company Reimbursement Insurance".

Modern Directors and Officers policies now frequently include cover for the

Company Entityitself as well as Employment Practice Liability.D&O insurance

isusually purchased by the companyitself, even when it is for the sole benefit of

directors and officers. Reasons for doing so are many, but commonly would

assist a company in attracting and retaining directors. Where a country's


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legislation prevents the company from purchasing the insurance, a premium split

between the directors and the company is often done,so as to demonstrate that

the directors have paid a portion of the premium. A common misperception of

D&O insurance is that it makes directors or officers able to engage in acts they

know to be wrong; this is not the case. Intentionally illegal acts or any illegal

gains/profits obtained by directors/officers are not covered in D&O insurance;

coverage would only extend to "wrongful acts as defined under the policy,

which mayinclude certain acts, omissions, misstatements etc. while acting as a

director/officer of the organization. Exclusionary language, however, would not

provide coverage for fraud,


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Errors

And

Omission

Insurance


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ERRORS AND OMISSIONS INSURANCE

What is Errors & Omissions Insurance?

Errors and Omissions Liability protectsyour company from claimsifyour client

holds you responsi ble for programming errors, software performance, or the

failure ofyour work to perform as promised in your contract. Coverage includes

legal defense costs - no matter how baseless the allegations. Errors and

Omissionsinsurance will pay for any resulting judgments

Against you, including court costs, u p to the coverage limits on your policy.

Coverage extends to both W2 employees and 1099 subcontractors, and can be

worldwide in scope.

When is Errors & Omissions needed?

We generally recommend this coverage be at the foundation of every companys

insurance portfolio. Usuallyit is wise to purchase the coverage prior to product

or site launch, or when you have customers. It can be a contract requirement

from companies that you perform services

Why do we need Errors & Omission?

Professional Liability coverage is not provided by a Commercial General

Liability policy. Commercial General Liability does not provide coverage for

programming errors, contract performance disputes or any other Professional

Liability issues. IT consultants and companies who have General Liabilitywithout Professional Liability (Errors or Omissions) coverage are taking serious

risk. Its like a doctor practicing medicine without Malpractice insurance.

Mistakes Happen.Every company messesup at some point. For example,you

recommend to a client that they run a certain test of theirsystem, afteryou did


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some extensive workon it. The client takesyour advice, the system crashes, and

they are unable to conduct business for a whole week. The client becomes

enraged, calls his attorney, and looks to you for reimbursement.

You Cant Be Everywhere. Sometimesyou cant personally handle every job.

Errors and Omissions coverage insures not only your mistakes, but also the

mistakes of the employees and Independent Contractors you hire. Most

Importantly: Errors and Omissions insurance might save you from extreme

embarrassment, a lost client, or worst of all, a bad reputation.

The risk of legal assessments caused by a service mistakes makes E&O

insurance an absolute necessity for any business. Even with work that seems less

risky, theres no outsmarting the consequences of a lawsuit. Practically any

firmer individual that improperly performsservices can cause a client to suffer

economic loss. Commercial General Liability does NOT provide coverage for

service errors, contract performance disputes or any other Professional Liability

issues. Consultants and companies who have General Liability without

Professional Liability (Errors or Omissions) coverage are taking a serious risk.

Even ifyoure not at fault, litigation is time-consuming, costly and potentially

disastrous to a firms reputation. E&O insurances a cost effective way to protect

your business. Typically, a general liability policy does not cover consequential

financial loss, and most exclude claims arising out of professional services. To

properly coveryour exposures,you need comprehensive Errors and Omissions

coverage in addition to your existing General Liability Policy. Optionalcoverages mayinclude Media and Networkliability.


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Network Security Liability

Can be Transmission of malicious code (i.e. computervirus),security breach of

your networkby a hacker, orunauthorized access to,use of, or tampering with

data orsystems.

Media Liability:

Means any form of defamation or tort related to: infringement of copyright

(including software copyright), trademark, title, trademark, trade name,slogan,

or service name; allegations of libel, slander, breach of privacy, product

disparagement, trade li bel; misappropriation of name or likeness or ideas,

plagiarism, infringement of copyright, trademark, or negligence regarding the

content of any media communication\

Errors and omissions insurance

Is business liability insurance for professionals such as insurance agents, real

estate agents and brokers, architects, third party administrators and other

business professionals An error or omission, a mistake, which causes financial

harm to another, can occur on almost any transaction in any profession. This

type ofinsurance helps to protect professional, an individual or a company, from

bearing the full cost of defense for lawsuits relating to an error or omission in

providing covered Professional Services. This is a separate coverage from

standard general liability or propertyinsurance policy."

Errors and Omissions Insurance may be referred as: E&O (Insurance), Errors(&) Omissions, Professional Liability (Insurance), Malpractice (Insurance), etc.


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Kidnap

andRansom

Insurance


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Kidnap and Ransom Insurance

What is Kidnap and Ransom Insurance?

Kidnap, Ransom and Extortion insurance provides numerous benefits and

services to the applicant and the insured. Kidnap, Ransom &Extortion Insurance

provides coverage for kidnappings and other events through combination of

financial indemnification and expert crisis management.

A basic policy can coveritemssuch as ransom payment, loss ofincome,interest

on bank loans, and medical/psychiatric care. Besides insurance, companies can

also utilize crisis management teams and employee training in what to do in a

hostage situation to minimize losses due to kidnap or ransom. The Kidnap,

Ransom and Extortion insurance covers named employees for individual or

aggregate amounts, with deductibles requiring the insured to participate in about

10% of any loss.

When do I need Kidnap and Ransom Insurance?

Kidnap Extortion and Detention are real dangers for companies operating both

overseas and in domestic markets. They are often overlooked by management on

the grounds that it won't ever happen to us, but the damage this can infliction a

business can be verysevere - as the annual roll call of corporate and individual

victims around the world testifies. With over 1,000 annual kidnappings of

professionals and executives worldwide and numerous terrorists attacks, life

and health insurance professionalsshould considersuch policies for anyone who

travels internationally. Those persons who are perceived to be wealthy need

Kidnap and Ransom Insurance. Not everyone generally needsit. A kidnappers

perception ofvictims liquid assets may have little to do with the real value of


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the victims assets. For people who travel frequently to high-risk regionssuch as

Columbia and Peru, this coverage could be a life saver.

Why do I need Kidnap and Ransom Insurance?

Kidnap and Ransom insurance plans provide assistance to the family and

business with regard to independent investigations, negotiations, arrangement

and delivery offends, and numerous other services vital to safe, speedy and

satisfactory resolution. Extortionists dont discriminate. Any company of any

size can be a target for extortion threats against the company and its employees.

People tend to associate business extortion and kidnapping with global

companies. The fact is,

Radical groups and criminals exist everywhere. Kidnap, Ransom and Extortion

Insurance will help you manage the costs associated with an extortion threat

against your products, proprietaryinformation, computersystem oryour people

can be enough to push a small to medium-sized company to its financial limits.

These risks may not feel like everyday exposures, but too often they are. And

when they happen,you may need financial assistance to meet extortion demands

and the extensive costs associated with negotiation and recovery. Due to

globalization of economies, multinational companies need to prepare for the

possibility of attacks on their employees and facilitiesvirtually anywhere in the

world


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Kidnap and ransom insurance orK&R insurance

Is designed to protect individuals and corporations operating in high-risk areas

around the world,such as Mexico, Venezuela, Haiti, and Nigeria

[1], certain other countries in Latin America, as well as some parts of the

Russian Federation and Eastern Europe. K&Rinsurance policies typically cover

the perils ofkidnap, extortion, wrongful detention and hijacking

[2].K&R policies are indemnity policies - they reimburse a lossincurred by the

insured. The policies do not pay ransoms on the behalf of the insured. The

insured must first pay the ransom, thus incurring the loss, and then seek

reimbursement under the policy

[3]. Losses typically reimbursed by K&R polices are ransom payments, loss-of-

ransom-in-transit and additional expenses,such as medical expenses

[4].The policies also typically indemnify personal accident losses caused by a

kidnap. These include death, dismemberment, and permanent total disablement

of a kidnapped person. They also typically pay forth fees and expenses of crisis

management consultants

[5]. these consultants provide advice to the insured on how to best respond to theincident. The policies may be written to cover families and corporations. Some

policiesinclude kidnap prevention training

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