All You Need to Know About Liability Insurance

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General Liability Insurance

General Liability insurance protects an insured against claims resulting from injuries and damage to people and property caused by the insured.

Depending on the nature of the business and the extent to which the business interacts with the general public, liabilities from third parties may arise from many sources including but not limited to the following:

• Bodily injuries or death to customers or visitors whilst visiting a company’s premises and caused by accidents for which the company may be liable.
• Damage to property(ies) of third parties caused by the actions of employees or machinery belonging to the company. 

The insurance covers the legal costs of defending the insured against the lawsuits (if any) and also pays any judgments against the insured. The total quantum of payments made by the insurance company on behalf of the client is limited by the sum assured declared in the policy.

The following are not covered under this policy:

• Criminal Prosecution.
• Contractual Liabilities.
• Intentional Damage.   

The policy does not protect against a company’s directors and officers from being sued. It also does not protect a company against errors and omissions. Specific insurance policies need to be taken for these eventualities. All payouts under this policy are always made to third parties (lawyers, claimants) and not to the insured party.

Professional Liability Insurance (Errors and Omissions Insurance)

This insurance pays for the legal defense of the insured if a client or a customer sues the insured business for negligence or malpractice in the course of providing the services and products the company sells or offers to its clients. This includes failure of the professional to perform their duties to the satisfaction of their clients.

The policy also pays the amount of any court-ordered judgments against the insured. The total amount paid by the insurance company on behalf of the insured will not be more than the stated limit in the policy. 

This policy does not cover the following:

• Criminal Prosecution.
• Acts that are fraudulent and dishonest.
• Bodily injury claims.

Amounts paid by the insurance company on behalf of the insured is limited by the Sum Assured stated in the policy.

Directors and Officers (D&O) Liability Insurance

D&O insurance offers protection for members of the board of directors and officers of an insured company against legal judgments and costs arising from unlawful acts such as releasing confidential information, gross negligence, conflict of interest, erroneous investment decisions and actions such as wrongfully hiring and firing employees and many other actions.

The insurance covers the legal costs of defending the insured against lawsuits (if any) and also pays any judgments against the insured. The total quantum of payments made by the insurance company on behalf of the client is limited by the sum assured declared in the policy.

The policy does not cover the following:

• Fraud.
• Criminal Acts.

Employers’ Liability (Workmen’s Compensation)

This insurance protects the insured against the liabilities arising from injuries or the death of an employee of the company in the course of performing his/her duties for the company.

In Ghana, the benefits payable to injured employees and to the family of dead employees are mandated by statute. The new Insurance Act, 2021[Act 1061] stipulates that all companies in Ghana with 15 or more employees have to purchase Workmen’s Compensation insurance from a licensed insurance company.

Product Liability Insurance

For businesses that manufacture products for sale to the general public, this insurance offers protection against lawsuits arising from injury or death caused by the usage of their products by the general public.