Liability insurance policies protect the policyholder and his company from the financial consequences of a legal claim for damages against him.
Depending on the level of cover chosen, liability insurance policies offer protection against the legal obligation to pay compensation for risks arising from the insured operation. This type of business liability insurance is supplemented, for example, by environmental liability, environmental damage or extended product liability insurance. Every liability insurance policy first examines the liability issue, defends against unfounded claims and indemnifies the policyholder against justified claims by third parties.
The most important liability insurances
- Business liability insurance (BHV)
- Extended product liability insurance
- Recall cost insurance
- Environmental liability insurance (UHV)
- Environmental damage insurance (USV)
- Financial loss / professional liability insurance
BUSINESS LIABILITY INSURANCE (BHV)
A business liability insurance offers protection against the claims of third parties for personal injury, property damage and co-insured financial losses within the scope of business activities.
Typical risks covered by the BHV are
- The main operational risks correspond to the individual company description (e.g. production, distribution, trade, services, main and secondary construction risks, research and development)
- Typical ancillary operational risks, such as renting, leasing, being a builder, owner and tenant of developed and undeveloped land, holding business events, etc.
- Internet liability risk
- Commercial supply of temporary workers
- Participation in working and supply consortia
- Possession and operation of unregistered vehicles
- Damages resulting from discrimination, in particular from the General Equal Opportunities Act (AGG)
- Key damage
- Damage to rented movable and immovable property
- Damage caused by manoeuvring foreign motor vehicles
- Damage caused by loading or unloading
What are typical loss examples in public liability insurance?
The BHV covers the main risks from operating activities. A classic example is liability for personal injury resulting from failure to spread gritting in winter on the company premises. The focus is on different risks depending on the operating activity.
For a manufacturing company, for example, insurance protection for claims for damages that are made after delivery of the products or completion of the activities is elementary. These include installation and removal costs, testing and sorting costs, recall costs and, of course, personal injury due to safety-related malfunctions.
In the case of removal companies, care must be taken to ensure that liability is properly covered, for example for damage in the stairwell of the person being moved. Contract logistics providers are increasingly becoming part of the value-added chain of manufacturing companies – here, the contractual liability agreements must be examined closely in order to adjust the scope of cover, for example within the scope of extended product liability, in line with the risk.
Frequently observed are recourses from property insurers. For example, after a fire damage, they try to regress their expenses to tenants or neighbours who caused the damage. In addition to the quality of the insurance conditions, the main focus here is on risk-adequate sums insured.
EXTENDED PRODUCT LIABILITY INSURANCE
The extended product liability supplements the insurance protection for manufacturers, importers and dealers by co-insuring so-called product financial losses.
What are typical examples of damage in the above-mentioned product liability insurance?
Example 1: Contamination during the manufacturing process leads to the production of defective finished products which are no longer saleable.
Example 2: Defective supplied parts lead to consequential damage to the manufactured products despite final inspection at the customer’s premises; in addition, the customer must incur considerable costs in order to remove the defective parts from other, previously undamaged products and install defect-free parts.
ENVIRONMENTAL LIABILITY INSURANCE (UHV)
The UHV protects a company against liability claims arising from damage caused by environmental impacts. The insurance covers personal injury, property damage and financial losses caused by an environmental impact transmitted via the air, water or soil. However, environmental damage within the meaning of the Environmental Liability Act is limited only to so-called third-party damage. The law does not provide for liability for ecological damage.
It is worth noting that the Environmental Liability Act, which was ultimately responsible for the introduction of the UHV, generally provides for no-fault liability for tradespeople and strict liability for installations that are particularly hazardous to the environment.
What is a typical example of damage in environmental liability insurance?
A crane operating on the company premises topples over and damages an above-ground oil tank on the neighbouring premises. The hazardous substances leak out and seep into the groundwater.
A fire occurs on the premises of a warehouse keeper. The neighbouring building is set on fire by flying sparks, surrounding residential buildings are heavily polluted by the smoke gases.
Pollution of a surface water, so that a power plant has to stop withdrawing cooling water.
ENVIRONMENTAL DAMAGE INSURANCE (USV)
Under the Environmental Damage Act, which came into force in 2007, a trader is liable to the general public for damage to biodiversity. The person causing damage to flora, fauna, soil and water is obliged to take appropriate remedial action.Environmental damage insurance supplements the standard business and environmental liability insurance and includes as basic cover damage to soil, water and protected animal and plant species and their habitats outside the company’s own premises caused by facilities or activities on the company’s premises. The insurance also covers activities on third-party property as well as damage caused by products that may be the result of a manufacturing defect. Damage to the company’s own property and to groundwater can also be insured via additional modules.
What are typical examples of damage in environmental damage insurance?
A cleaning and disinfecting liquid gets into a stream through the farm drainage system due to an accident on the company premises. The contamination causes fish to die and pollutes the bed of the stream. The brook bed must be cleaned by experts at great expense. A short time later, the authorities involved establish that the course of the stream is part of a nature reserve that is home to protected species, such as river mussel and crayfish. In order to preserve the species, an elaborate and costly recolonisation is necessary.
What solutions does the SCHUNCK GROUP offer?
The SCHUNCK GROUP reviews existing insurance contracts and, based on an individual risk analysis, creates an insurance solution that is specially tailored to the needs of your company.
Own, market-leading wordings – specially tailored to the individual risk situation of the company
- Constant adaptation of the insurance concept to changing conditions, for example through changes in the law
- Support of international insurance programmes on site
- Worldwide coverage
- Active risk management for loss prevention and reduction
PECUNIARY DAMAGE/ PROFESSIONAL LIABILITY INSURANCE
Financial loss insurance provides protection for “real” financial losses, i.e. for such losses that are neither personal injury nor property damage and are not derived from losses of this kind.
What are typical examples of damage in extended product liability insurance?
- A property manager lets rent claims against tenants lapse.
- An IT service provider is planning to set up an IT network for its customer. At the planned start of operations, it turns out that the hardware is unsuitable and also completely oversized.
- A lawyer misses an appeal deadline for his client.
- A tax adviser disregards tax authorities’ guidelines that would benefit his Client.