Public Liability Insurance
Overview
Open a shop, run a school, build a block of flats or simply keep a dog at home, and you create a risk that has nothing to do with your own property: the risk that you injure someone else, or damage what belongs to them, and are made to pay for it in court. Public liability insurance is the cover that stands behind that risk. It does not pay for your own losses. It pays the person you have wronged, on your behalf, and it pays the lawyers who defend you.
In this lesson you will learn exactly what public liability insurance covers and who counts as a third party, how the same idea works in your private life as personal liability, how product liability follows the goods you sell long after they leave your counter, and the boundary that examiners test every year: why an injured customer is a public liability claim while an injured member of your staff is not.
Objectives
- Define public liability insurance and explain the exposure it covers
- Explain personal liability and identify who may be held liable
- Explain product liability and describe the losses it indemnifies
- Distinguish public liability from employer's liability insurance
Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Public Liability Insurance. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- Public liability insurance covers the insured's legal liability to: A. The insured's own employees B. Third parties who are members of the public C. The insurer D. The insured's shareholders Answer: B
- An injury caused by a defective product after it has been sold is covered by: A. Public liability insurance B. Employer's liability insurance C. Product liability insurance D. Fidelity guarantee insurance Answer: C
- Employer's liability insurance differs from public liability insurance mainly because it covers injury to: A. Members of the public B. Customers C. The insured's employees D. Passers by Answer: C
- Personal liability insurance responds when a person incurs legal liability in a: A. Trading capacity B. Private or domestic capacity C. Professional capacity D. Contractual capacity as an employer Answer: B
- A public liability policy has a limit of indemnity of 8,000,000 naira with legal costs payable in addition. Damages of 3,000,000 naira are awarded and defence costs are 600,000 naira. How much does the insurer pay? A. 3,000,000 naira B. 3,600,000 naira C. 8,000,000 naira D. 8,600,000 naira Answer: B
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Recommended Books
Past Questions
Wondering what past questions for this topic looks like? Here are a number of questions about Public Liability Insurance from previous years
Question 1 Report
(a) List six experts that would require professional indemnity insurance in their operations.
(b) Explain the cover provided by each of the following insurance 'policies:
(i) personal liability
(ii) public liability
(ii) professional indemnity
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