Scenario 1 – You are a successful business person and have earned the trust and reputation of your clients. You understand the perils and risks of your business and therefore have a comprehensive set of insurance policies to cover all risks related to your business and your family. On a lovely day, you take your Porsche on a drive, lose control and have an accident. You are unscathed, but a bystander is injured seriously. As a good citizen, you provide all assistance possible. Few weeks later, you get a legal notice to pay a sum of $ 10 million dollars to the injured person for damages and injury claims. Your insurance company tells you that they cannot do anything as you don’t have a liability insurance – the component that takes care of “third party damages”. You decide to fight the case. The lawyer demands an exorbitant fee to represent your case. You are sunk. All in all, you seem to be losing an entire life’s savings for a non-intentional fault of yours. You wish you had a liability insurance that could have taken care of this risk.
Scenario 2 – You are a doctor and you have performed a complex surgery on a patient. Due to a malfunction of the hospital’s oxygen supply, the patient has developed a complication and gone into a coma. The patient’s family sues the hospital and you (the doctor) for a large sum of money. You wish you had a professional liability insurance plus an umbrella insurance that not only protected you but also de-linked you from the negligence of the hospital.
Scenario 3 – You make software for your customers. All your software is well protected for copyright issues. An employee in your company includes a few lines of code given by the customer IT department. Your software product ships out to the customer. An individual is suing you and your customer for copyright violation. Your customer is in turn asking you for indemnity, because the product is developed by you. You wish you had a Product Liability Insurance plus an Indemnity Clause.
Scenario 4 – You are a top class manufacturer of electrical goods. Your products are tested for six sigma quality. One of your products which you shipped recently caused an overload on a business electrical system resulting in a short circuit and fire. You are pretty certain that your products wouldn’t have been the cause. The business (your customer) is suing you for a large sum of money citing damages, injury, loss of reputation and loss of business. You wish you had a Product Liability Insurance to cover this unforeseen risk.
Scenario 5 – You are a good employer who takes care of your entire employees’ needs. An employee had an accident at your premises due to his own fault (not following safety rules). You give all help. The employee recognizes, but in the end, he suffers from a disability. The employee is suing you for negligence, not helping him out of hardship and using a permanent disability cause, asking you for long term financial repatriation. You wish to prove your innocence and also cover this risk. You wish you had workers compensation insurance.
All the above cases relate to an insurance called “Liability Insurance” – which primarily aims to cover costs due to non wilful causes. It can include a perceivable third party injury or even a non tangible “loss of reputation” claim.
No matter how careful you are, how good a professional you are and how good your employees are, there is always a possibility of a third party risk. A liability insurance ensures peace of mind, protection and indemnification.