Liability and Miscellaneous Insurance
What the domain tests
This domain tests liability products such as public liability, product liability, professional indemnity, directors’ and officers’ liability, employers’ liability, fidelity guarantee, and cyber cover. It also tests policy triggers, limits, and exclusions.
Core rules and concepts
- Liability policies respond to the insured’s legal liability to third parties, not to damage to the insured’s own property.
- Occurrence-basis policies respond to injury or damage occurring during the policy period, even if the claim is made later. Claims-made policies respond when the claim is made during the policy period, often with a retroactive date.
- Limit of indemnity may be per claim, per occurrence, or aggregate. Defence costs may be inside or outside the limit, depending on wording.
- Professional indemnity covers negligent professional services. Product liability covers liability arising from defective products. D&O covers management liability. Fidelity guarantee covers employee dishonesty.
- Conditions commonly require prompt notice and may prohibit admission of liability without insurer consent.
Worked example
An architect is sued in 2024 for a design error in a 2021 project. Under a claims-made professional indemnity policy with a 2020 retroactive date and cover in force in 2024, the claim can be considered because it is made during the policy period and the act occurred after the retroactive date. An occurrence-basis policy would focus on when the damage occurred.
Traps that cost marks
Do not apply property indemnity concepts automatically to liability. Do not confuse claims-made with occurrence. Do not ignore the retroactive date. Do not assume defence costs are unlimited. Do not admit liability without checking the policy condition.