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 Ashwini Jonathan Fernandes Gaurav Gharat Jash Harsha Sonal ROLL.NO 207 208 209 210 211 212
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 member incur loss. The modern system relies on dedicated carriers to offer protection against specified perils in consideration of a premium. Liability insurance is designed to offer specific 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 liability insurance. In many countries, liability insurance is a compulsory form of insurance for those at risk of being sued by third parties for negligence. The most usual classes of mandatory policy cover the drivers of vehicles, 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 for such laws is that the classes of insured 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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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. 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 warranties included 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. Many small businesses do not secure general or professional liability insurance due to the high cost of premiums. However, in the event of a claim, out -ofpocket costs for a legal defense or settlement can far exceed premium costs.
 In some cases, the costs of a claim could be enough to shut down a small business.
Businesses must consider all potential risk exposures when deciding whether liability insurance is needed, and, if so, how much coverage is appropriate and cost-effective.
Those with the greatest public liability risk exposure are occupiers of premises where large numbers of third parties frequent at leisure including
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 risk by underwriters. In some cases underwriters 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 skateboards in public places. The majority of states require motorists to carry insurance and criminalize those who drive without a valid policy. 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. 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 actions in 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 liability insurance is not a compulsory class of insurance 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 liability is illustrated by
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cases such as those involving Mercedes-Benz for unstable 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.
Employer¶s liability insurance
New policies have been developed to cover any liability that might be imposed on an employer if an employee is injured in the course of his or her employment. In many states, the insurers are prohibited from including conditions within their policies that seek to impose any unreasonable 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 together under a general liability (or ³umbrella") policy. These risks may include bodily injury or property damage caused by direct or indirect actions of the insured.
Rules regarding liability insurance
Where the carrying of a policy is not mandatory and a third party makes a claim for 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 ownership 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 update 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 costs in the event they suffer 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/officers simultaneously. It has become closely associated with broader
management liability insurance, which covers liabilities of the corporation as well as the personal liabilities for the directors and officers of the corporation.
Typical sources of claims include 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 of interest. In the United States, however, corporations are often required by law, particularly state 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.
 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 Entity itself as well as Employment Practice Liability.D&O insurance is usually purchased by the company itself, 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 ³as defined under the policy, which may include certain acts, omissions, misstatements etc. while acting as a director/officer of the organization. Exclusionary language, however, would not provide coverage for fraud,
Errors And Omission Insurance
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ERRORS AND OMISSIONS INSURANCE
What is Errors & Omissions Insurance?
Errors and Omissions Liability protects your company from claims if your client holds you responsible for programming errors, software performance, or the failure of your work to perform as promised in your contract. Coverage includes legal defense costs - no matter how baseless the allegations. Errors and Omissions insurance will pay for any resulting judgments Against you, including court costs, up to the coverag e 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 company¶s insurance portfolio. Usually it 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 Liability without Professional Liability (Errors or Omissions) coverage are taking serious risk. It¶s like a doctor practicing medicine without Malpractice insurance. Mistakes Happen. Every company messes up at some point. For example, you recommend to a client that they run a certain test of their system, after you did
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some extensive work on it. The client takes your 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 Can¶t Be Everywhere. Sometimes you can¶t 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, there¶s no outsmarting the consequences of a lawsuit. Practically any firmer individual that improperly performs services 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 if you¶re not at fault, litigation is time-consuming, costly and potentially disastrous to a firm¶s 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 cover your exposures, you need comprehensive Errors and Omissions coverage in addition to your existing General Liability Policy. Optional coverage¶s may include Media and Network liability.
Network Security Liability
Can be Transmission of malicious code (i.e. computer virus), security breach of your network by a hacker, or unauthorized access to, use of, or tampering with data or systems.
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 libel; 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 of insurance 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 property insurance policy." Errors and Omissions Insurance may be referred as: E&O (Insurance), Errors (&) Omissions, Professional Liability (Insurance), Malpractice (Insurance), etc.
Kidnap and Ransom 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 cover items such as ransom payment, loss of income, 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 ³it won't ever happen to us´, but the damage this can infliction a business can be very severe - 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 professionals should consider such policies for anyone who travels internationally. Those persons who are perceived to be wealthy need Kidnap and Ransom Insurance. Not everyone generally needs it. A kidnappers¶ perception of victim¶s liquid assets may have little to do with the real value of
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the victim¶s assets. For people who travel frequently to high-risk regions such 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 don¶t 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, proprietary information, computer system or your 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 facilities virtually anywhere in the world
Kidnap and ransom insurance or K&R insurance
Is designed to protect individuals and corporations operating in high-risk areas around the world, such as Mexico, Venezuela, Haiti, and Nigeria
, certain other countries in Latin America, as well as some parts of the Russian Federation and Eastern Europe. K&R insurance policies typically cover the perils of kidnap, extortion, wrongful detention and hijacking
.K&R policies are indemnity policies - they reimburse a loss incurred 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
. Losses typically reimbursed by K&R polices are ransom payments, loss-ofransom-in-transit and additional expenses, such as medical expenses
.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
. these consultants provide advice to the insured on how to best respond to the incident. The policies may be written to cover families and corporations. Some policies include kidnap prevention training