Public Liability Insurance


public liability insurance

Public Liability insurance covers you against claims made by third parties or a client that has suffered an injury or damage to their property as a result of your business, premises or a product supplied. All businesses have some exposure to tortious liabilities.

A Tort, is a civil wrong that causes a claimant to suffer loss or harm resulting in legal liability for the person or business who commits the tortious act. A person or business shall be liable under tort, if he commits an act or omission which results in loss or damage to another. In order to establish the liability of the tort-feasor, it may not be necessary to prove that the tort-feasor intended to cause loss to the claimant. It is sufficient if the claimant establishes that the tort-feasor violated a legal obligation to take reasonable care, whether intentionally or not.

In the UAE, the principle of tortious liability is mainly accommodated under Federal Law No. (05) of 1985 on the issuance of the Civil Transactions Law (the "Civil Code"), under Articles 124, and 282 through 298. A very simplistic summary would be: Any harm done to another shall render the actor, though incapable of discretion, liability to make the harm good. The civil code mainly intends to safeguard personal security, property, reputation and economic interests of persons.

Public Liability claims can range from something as simple as a visitor slipping on a wet floor and even food poisoning from consuming the meal you prepared for a guest.

DO I NEED PUBLIC LIABILITY INSURANCE?

  • Do you own or rent a property such as a building, warehouse or an office?
  • Does your business involve work in public areas or visits to a client’s premises?
  • Does your business involve manufacture or distribution of any products?

If your answer is yes to any of the above, you have some level of exposure towards third parties and it is highly recommended to have a public liability insurance to cover these risks. You may additionally be required by contract to provide proof of such an insurance cover to your clients.

HOW DOES THE COVER WORK?

Public Liability Insurance offers cover against claims from Third Parties or clients up to the Limit specified in the policy. The Limits would include costs of legal defense and damages awarded by a court.
Limits can be offered from as low as AED 500,000 up to AED 100,000,000 on any one occurrence up to.
Obviously the limits required may depend on a requirement from a Free Zone or as contractually required for a Project.
Insurers maintain the right to defend claims and Insured’s aren’t allowed to offer any remedy or accept liability without written consent of the insurers.

Cover is usually offered on an “occurrence basis”. This means that as long as a covered event has “occurred” within the period of insurance, the policy will respond. So it doesn’t matter if the claim was made after the policy expired.

WHAT TYPES OF CLAIMS ARE COVERED?

Public Liability Insurance covers the insured’s liabilities to pay damages to third parties (including claimant’s costs, fees and expenses) in accordance with the Law for bodily injury or property damages.

Instead of specifying the types of claims covered, public liability insurance policies specifically exclude certain types of claims. Such as:

  1. Any liability arising out of any owned or rented Motor vehicle.
  2. Any liability arising out of any owned or rented aircraft or watercraft
  3. Any liability for property owned by the insured
  4. Any liability for pollution unless caused by a sudden, specific, accidental event
  5. Any liability arising from a Product (Product Liability cover can be added on)
  6. Any liability towards employees
  7. Any liability arising out of ionizing radiation, radioactivity from a nuclear fuel
  8. Any liability directly or indirectly arising out of war, mutiny, foreign enemy, rebellion, revolution etc
  9. Punitive or Exemplary damages, fines, penalties

PREMISES LIABILITY vs WORK AWAY LIABILITY?

Two types of Public Liability Insurance are typically sold in the UAE.

  1. Cover for Premises Risks only
  2. Cover for All Business Activities (Including Work Away)

Premises Risks: Cover is provided only in respect of any third party claims arising out of your premises. This could be a visitor slipping on a wet floor in your office or a Fire starting at your office and spreading to a neighbor.

Work Away: Cover is provided in respect of any third party claims arising out of your business activities. This could be from damage to a client’s property while you carry out some work there or injury to general public while carrying out your business in a public area.

Depending on your business and risk exposure, your advisor will be able to recommend the right covers for you.

Sources:

http://www.mondaq.com/x/80358/trials+appeals+compensation/Tortious+Liability+In+The+UAE+An+Unexplored+Trail+To+Justice
https://legaladviceme.com/legislation/126/uae-federal-law-5-of-1985-on-civil-transactions-law-of-united-arab-emirates
http://www.inhouselawyer.co.uk/legal-briefing/damages-and-contracts-in-the-uae/?share=email&pdf=2258

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If you would like further information about any of the services we offer or would like to discuss in detail a particular service or quote, please use the form on the right. We’re always delighted to hear from you. Do leave us comments, suggestions or queries, and we can arrange a time to call you. Or why not enquire over the phone? (+971) 04 421 5819.


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AFIA Insurance Brokerage Services L.L.C. registration no. 85, under United Arab Emirates Insurance Authority