Commercial General Insurance: Proportionality and Contract Terms
What to master
Commercial general insurance applies proportionality and contract law rather than the full consumer protection regime. Candidates must know property, employers’ liability, public and products liability, professional indemnity, business interruption, and the principles of indemnity, insurable interest, disclosure, warranties, conditions, subrogation and contribution. Employers’ liability is compulsory for employees; public liability is not. Professional indemnity is often written on a claims-made basis. Business interruption responds to lost gross profit and increased cost of working, not simply lost turnover. A fair presentation of the risk is expected; misrepresentation or non-disclosure can allow avoidance or a proportional remedy. Large commercial clients may not receive the same Consumer Protection Code protections as consumers.
Traps
Assuming the Consumer Protection Code applies identically to large commercial clients. Confusing employers’ liability with public liability. Forgetting average or co-insurance conditions. Treating a warranty as a mere condition. Measuring business interruption loss as turnover rather than gross profit. Missing the claims-made trigger in professional indemnity.
Worked example
Sum insured €300,000; property value €500,000; loss €100,000. Under a pro-rata average condition, recovery = 300 ÷ 500 × 100,000 = €60,000, less excess. Rule of thumb: check the basis of settlement and any average or co-insurance clause before advising on sums insured.