An Introduction to Liability Insurance

What follows is an alphabetical glossary of Broadform liability insurance terminology. Note that readers should consult the specific policy wordings and should not rely on these plain language, abridged explanations of terms, conditions and exclusions. Language used in policy documents also varies from insurer to insurer and across different jurisdictions so that should also be taken into account.

Aircraft and Watercraft Exclusion

Excludes claims related to the ownership or use of aircraft or watercraft. Does provide cover for smaller inland water vessels (15m in length)

Airport and Airstrip Exclusion

Excludes liability arising from the operation of airports or airstrips. Does provide cover for airstrips without control tower operations.

Asbestos Exclusion

Excludes claims related to asbestos exposure or diseases.

Business Activities

Reflected in the policy contract to establish what sort of business activities are covered.

Cancellation Conditions

Terms dictating when and how an insurance policy can be canceled. Normally 30 days by either party.

Claims Notification Requirements

Provides conditions for time periods and circumstances as to when the insurer must be notified of claims or losses.

Claims Preparation Costs

Costs for preparing documents needed to support an insurance claim.

Communicable Diseases Exclusion

Excludes coverage for losses related to the transmission of communicable diseases.

Contingent Plant Hire Liability

Covers ongoing plant hire costs when the insured has damaged third party plant, leased to them.

Continuous Exposure Clause

Determines what the date of loss would be where injury or damage has resulted from some sort of continuous exposure to the cause of the loss.

Contractors Liability

Coverage for liability from construction activities conducted by or for the insured.

Copyright Infringement

Coverage for events where a third party is alleging the insured has breached a copyright or patent.

Cross Liabilities

Provides separate coverage for claims between different insured parties under the same policy. Useful where multiple insureds are covered under one policy.

Custody and Control Exclusion

Excludes liability for damage to property under the insured's control. There are some carvebacks for things like rented property, property temporarily in custody, parking facilities.

Custody and Control Extension

Brings cover back into the policy for third party property in the insureds custody and control.

Cyber Exclusion

Excludes coverage for incidents related to cyber risks such as hacking or viruses.

Damage

The loss of possession or control of, or physical Damage to tangible property or interference with servitude or right of access or other infringement of real or personal rights to the use of property.

Damages

Legal term used to describe the compensation being claimed by the third party.

Data Exclusion

Excludes claims involving the loss or damage of electronic data.

Deductible

The amount of the claim that the insured is responsible for.

Defamation

Liability coverage for written or spoken defamatory statements. Also note this isn't suitable for professionals - PI cover more appropriate.

Defective Workmanship

Coverage for liability arising from poor or faulty workmanship. Note that the part that was worked in is excluded. Only the resultant damage is covered.

Defence Costs

Legal expenses for defending against claims, usually covered by the insurer.

Deliberate Acts Exclusion

Excludes coverage for intentional or deliberate wrongful acts.

Derangement of Data Exclusion

Excludes claims related to corruption or loss of electronic data.

DIC/DIL (formerly Southern African Territories)

Provides coverage for differences in conditions or limits for operations in specific regions. Useful for companies with operations in other countries.

Electronic Data Exclusion

Excludes liability for damages to electronic data.

Employers Liability (including employee to employee)

Covers employee claims for injury during the course of employment. Note that COID actually picks up claims here so its contingency cover.

Employment Practices Liability

Covers claims related to employment issues such as wrongful termination or discrimination.

Errors and Omissions

Liability coverage for mistakes or negligence in professional services.

Event

An incident that triggers coverage under an insurance policy.

Excess Motor Liability

Provides additional liability coverage beyond the insured’s primary motor insurance policy.

Exhibitors Liability

Coverage for liabilities associated with exhibitions, including stand setup or breakdown.

Extended Reporting Period Clause

Allows claims to be reported after the policy expires under certain conditions.

Fraud Exclusion

Excludes coverage for claims involving fraudulent acts.

Fungus and Mould Exclusion

Excludes liability related to fungi or mould exposure and remediation.

Gratuitous Negligent Advice

Covers liability for negligent advice given without any charge by the insured.

Incidental Medical Malpractice

Covers claims related to minor medical services provided incidentally.

Indemnity Clause

Defines the insurer's obligation to compensate for covered losses.

Indemnity to Others

Extends coverage to third parties as specified in the policy. This is useful when the insured is using subcontractors.

Inefficacy

Covers financial losses arising from a product or service failing to perform as intended.

Injury

Refers to bodily harm, illness, or death caused by an insured event.

Insolvency Exclusion

Excludes coverage for claims arising due to the insureds insolvency.

Insurer

The entity providing the insurance coverage.

Insurers Right to Settle Condition

Allows the insurer to settle claims on behalf of the insured.

Interpretation of Policy Jurisdiction Condition

Defines the jurisdiction for interpreting the policy terms and conditions. Not to be confused with the jurisdiction in which a claim can be brought by a third party which is worldwide (excl North America)

Lateral Support

Coverage for damages caused by the removal or weakening of support to another's property.

Liability Assumed by Agreement Exclusion

Excludes liabilities assumed under a contract which wouldn’t normally exist without the contract.

Limits of Indemnity

The maximum amount the insurer will pay for a claim or set of claims.

Liquidated Damages Exclusion

Excludes claims for agreed financial penalties stipulated in contracts.

Loss of Documents

Coverage for liability arising from the loss or damage of important documents.

Material Changes Condition

Requires the insured to notify the insurer of significant changes that affect the risk.

Mitigation Expenses

Costs incurred to prevent further loss or damage after an incident.

Negligent Advice

Covers liability for incorrect or inadequate advice given in relation to products or services.

Notification

The process of informing the insurer about a potential claim.

Nuclear Exclusion

Excludes liability for incidents involving nuclear energy or radiation.

Occurrence

An event resulting in a claim, often within the current policy period or after the retroactive date.

Operative Clause

Defines the core coverage and scope of the insurance policy.

Policy

The insurance contract outlining the terms, conditions, and coverages.

Pollution

The release of contaminants that cause environmental damage. Cover is limited to sudden and unforeseen events (not gradual).

Pollution Clean-up Costs

Coverage for costs incurred to clean up pollution on the insured's premises.

Preamble

The introductory section of the insurance policy outlining its scope and purpose.

Premium Adjustment and Declaration Condition

Allows for premium adjustments based on actual business data after the policy period.

Premium Payment Condition

Specifies when and how the insured must pay premiums to maintain coverage.

Prior Events Exclusion

Excludes claims for events that occurred before the policy start date or retroactive date.

Product

Goods or services provided by the insured. These are normally tangible products (not things like software or data).

Product Guarantee

Coverage to replace a product which fails to meet specified performance standards.

Product Inefficacy

Covers third-party financial losses resulting from a product failing to perform as expected.

Product Liability

Coverage for liability due to harm caused by defective or harmful products.

Product Recall

Coverage for costs related to recalling defective products from the market.

Professional Services

Defines professional services in the context of excluded activities or informs how the errors and omissions extension will respond.

Public Liability

Insurance covering third-party claims for bodily injury or property damage. Not limited to the insureds premises (work away is covered).

Public Relations Expenses

Costs incurred to manage public relations and reputational damage following an insured event.

Punitive Damages Exclusion

Excludes coverage for punitive damages awarded by courts.

Pure Economic Loss

Covers financial losses not resulting from physical damage or injury and not related to the supply of a product.

Retroactive Date

The earliest date an event can occur for coverage to be provided under the policy.

Sanctions Exclusion

Excludes coverage for activities/entities/persons violating international or national economic sanctions.

Settlement or Admission of Liability Exclusion

Excludes coverage for settlements made without insurer approval.

Sexual Abuse Exclusion

Excludes coverage for claims related to sexual abuse, molestation or harassment.

Spread of Fire

Covers liability for damages resulting from uncontrolled fire spreading from the insureds property.

Spread of Fire Mitigation Expenses

Covers costs incurred to prevent a fire from spreading to third-party properties.

Statutory Defence Costs

Covers legal costs for defending against criminal allegations related to statutory violations.

Territorial Limits

Defines the geographical area in which the insurance policy provides coverage.

The Insured

The individual or entity covered under the policy.

Tobacco Exclusion

Excludes claims related to the manufacture or sale of tobacco products.

Transport of Dangerous Goods Exclusion

Excludes liability for transporting hazardous materials.

Vehicle

A mode of transportation, often referring to land vehicles in policy terms.

Vehicle Exclusion

Excludes liability for damages arising from the use of vehicles. There are some carvebacks in liability policies.

War and Terrorism Exclusion

Excludes coverage for claims related to war or terrorist acts.

Warehousemans and Carriers Liability

Coverage for liability related to property damage during storage or transportation.

Wrongful Arrest

Liability coverage for wrongful arrest, false imprisonment, or defamation during an arrest.

Be sure to check out our other glossary pages

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