Commercial General Insurance
Core concepts
Commercial lines applies general insurance principles to businesses: property/ fire, business interruption, liability (public, products, employers'), commercial motor, and marine/engineering as relevant. Candidates must understand indemnity, reinstatement, co-insurance, deductibles, policy limits (per occurrence vs. aggregate), and warranties/conditions.
Key technical ideas: business interruption covers loss of gross profit/turnover following an insured peril, with an indemnity period; employers' liability is often compulsory; public liability covers third-party injury/property damage; products liability covers goods supplied. Understand risk assessment, sum insured adequacy, average, and claims notification duties.
Traps in questions
- Confusing public liability (third parties on premises) with products liability (goods supplied) and employers' liability (employees).
- Forgetting business interruption requires a material damage trigger and an indemnity period.
- Mixing per-occurrence and aggregate limits.
- Assuming reinstatement (new-for-old) always applies - often optional and conditional.
- Overlooking warranties (strict conditions) vs. representations.
Worked example / rule of thumb
BI example: gross profit 500,000, indemnity period 12 months, insured peril causes 3 months' closure with 60% loss of turnover → claim ≈ 500,000 × (3/12) × 0.60 = 75,000, subject to sum insured and deductibles.
Rule of thumb: Set the BI sum insured on gross profit (or turnover) for the full indemnity period, not just the rebuild period. Always check whether the limit is per occurrence or aggregate.