What is General Liability Insurance? Coverage, Benefits, And Example

The definition of liability insurance ( third party liability ) is insurance that provides financial protection from the risk of legal liability. So, this insurance will provide compensation money if the customer gets a lawsuit from a third party.

For example, we accidentally hit someone else’s car and they demand compensation for damage to the car. In this case, the insurance will reimburse the money.

But keep in mind, the compensation paid by the insurance is not based on the agreement between us and the third party. There must be a court decision. So, you can’t just shoot nominally

Now maybe you are still wondering if you are one of those people who need this insurance. To understand more, let’s see the next discussion!

Who needs liability insurance?

Liability insurance is needed by people who are prone to lawsuits from other parties. Here are some examples.

1. Professionals with positions of influence

For example, you have a high position in the company, say Director. At work, there are many big decisions you have to make. Often these decisions risk harming the company or third parties.

Not only that, your employee could have made a fatal mistake that caused his boss to get sued. An example of a loss that can arise is the loss of company assets due to fraud .

That’s why, as the highest decision holder, you need this product that will bear all the risks of loss due to work. Contractor liability insurance nj. Professional liability insurance for interior designers. Commercial liability insurance broker. Business liability and workers comp insurance.

2. Service provider profession

Doctors and other medical workers can be very prone to dealing with legal problems . The reason is, a person’s life is in their hands and if there is a work error, the problem can be brought to court.

It is important to cover such a large responsibility with insurance. Therefore, there is also third party liability insurance for the medical profession. professional liability insurance for marketing consultants.

3. Business owners

In doing business, of course we will deal with many other parties. If there is an error in the business process and harms third parties, your business may be asked for compensation. Hence, employers are one of the main customers of liability insurance.

In addition to the professions mentioned above, this product is also found in several other insurance products. For example, vehicle insurance, property insurance and others.

4. Owners of motorized vehicles 

Individuals who own motorized vehicles such as car or motorbike owners also need this insurance. This is because they have legal responsibility in the event of an accident that causes damage to property or results in injury to others.

By having liability insurance, vehicle owners avoid major financial risks caused by liability for compensation to third parties. Contractor liability insurance nj. Professional liability insurance for interior designers. Commercial liability insurance broker. Business liability and workers comp insurance.

5. Property owners

Liability insurance is also important for property owners because they have legal responsibility in the event of an accident or injury to someone else in the property.

Liability insurance will protect you from financial losses that may arise from such lawsuits, give you peace of mind and assist in legal proceedings if lawsuits are filed.

In addition, some companies or regulations require property owners to have liability insurance as a regulatory requirement.

Liability insurance benefits

Each type of insurance offers different benefits for different needs. The benefits of liability insurance include:

Compensation for third party losses

This benefit is provided by insurance to replace losses suffered by third parties, for example if they are injured in an accident or suffer from illness due to activities carried out by the customer.

Compensation is given as a form of legal responsibility from customers whose risks are transferred to insurance.

Compensation for court costs in legal cases

Lawsuits from third parties also generate legal costs, such as court fees and costs for court assistance. Generally, customers must add insurance premiums to get this benefit.

Types of liability insurance

The types of liability insurance products that exist in Indonesia are very diverse. The name of the product varies from company to company. However, in general there are three types that you can find, which are as follows. Contractor liability insurance nj. Professional liability insurance for interior designers. Commercial liability insurance broker. Business liability and workers comp insurance.

Personal liability insurance ( personal liability insurance )

This product will provide legal liability protection for individuals. So if you fall into the category of individuals who are prone to legal problems, choose personal liability insurance , OK?

What will be covered is bodily injury and/or damage and loss of assets belonging to third parties.

General liability insurance ( general liability insurance )

This type of insurance targets business owners. So, insurance will cover lawsuits against the company that you own. There are three types of general liability insurance on the market, namely:

1. Public liability 

Public liability insurance ( public liability ) is insurance that will pay compensation for company activities that harm the general public. This insurance is often used by companies engaged in the oil and gas or textile sector, because they are prone to polluting the surrounding environment.

2. Product liability

Product liability is suitable for business people who market risky products. For example, if you own a food factory and the product makes hundreds of thousands of your customers sick due to production errors, you will surely be sued. Insurance will help you pay compensation to the customers earlier.

3. Comprehensive general liability

Is a combined product of public liability and product liability .

4. Employer’s liability

Covers the risk of material loss or physical injury due to company activities experienced by its employees.

Professional liability insurance ( professional liability insurance )

As we discussed earlier, some professions can also be insured, you know ! For example, medical profession liability insurance guarantees the risk of claims for damages faced by doctors due to errors in practice.

Sample liability insurance policy

Each insurance company offers different product details. In order to understand more about the details, let’s look at the following sample policy from Chubb insurance .

Broadform Liability Insurance from Chubb

This insurance is actually the same as comprehensive general liability , which is a combination of public liability and product liability . This product is suitable for those of you who have a business. The following is an explanation of the policy and the calculation of the premium. Contractor liability insurance nj. Professional liability insurance for interior designers. Commercial liability insurance broker. Business liability and workers comp insurance.

coverage

Chubb’s Broadform Liability Insurance insurance product offers the following coverage.

• Compensation for losses due to physical injury and property damage.
• Payment of all costs arising from lawsuits.

Claim exclusion

There are several reasons that can cancel a Chubb insurance claim, namely:

• Damage to aircraft and its derivative products.
• Contractual liability.
• Damage to objects containing asbestos.
• Job accountability.
• Things that have lost their use.
• Pollutants and radioactivity
• Losses due to product defects.
• Product warranties and recalls.
• Professional liability.
• Fines, penalties, damages, sanctions.
• Vehicle use.
• War.
• Operations in the United States and Canada.
• Property entrusted/leased to the insured.

Expansion

Meanwhile, if you take the expansion, then there is an additional premium that we have to pay. Here are the expansion options.

• Legal or attorney defense costs.
• Compensation for losses due to ownership or driving a vehicle (there are exceptions, but with this extension it becomes void).
• Compensation for property leased to the insured (there are exceptions, but with this extension it becomes void).
• Compensation for property damage and physical injury due to accidental pollution (there are exceptions, but by extension this becomes void).

Chubb liability insurance premium simulation and calculation

To get protection from Chubb, you must pay a premium of 0.15-0.6 percent of the sum insured, with the following considerations:

• Type of business
• Total income in a year
• Coverage limit
• Coverage location

Apart from the premium, there are other costs that will be charged to customers, namely:

• Policy fee IDR 50 thousand (US$ 50)
• Stamp duty IDR 6,000 (US$ 6)

To make it easier to understand, let’s look at the following simulation.

• Customer: PT Nana Nini
• Line of business: coconut juice processing
• Annual revenue: US$20 million
• Coverage limit: US$1 million per incident.
• Location of cover: industrial area, Indonesia.

Based on this information, the premium charged to PT Nana Nini is:

• Product liability = 0.45 percent
• Public accountability = 0.15 percent

Public liability premium	0.15% x US$1 million	US$1,500
Product liability premium	0.45% x US$1 million	US$4,500
Policy and stamp duty costs	US$50 + US$6	US$56
The total premium that PT Nana Nini has to pay per year	US$ 6,056 / IDR 100.3 million

This is an example of an insurance policy taken from a liability insurance provider in Indonesia. Want to research other brands? Check out the next review. Contractor liability insurance nj. Professional liability insurance for interior designers. Commercial liability insurance broker. Business liability and workers comp insurance.

List of liability insurance

There are many insurers that provide this type in Indonesia, including:

1. Jasindo

Jasindo is a general insurance that has been operating for more than 150 years. When viewed based on the financial statements, the company which was founded in 1845 has a solvency ratio of 178 percent, above the government’s requirement of 120 percent. That is, financial health is quite good.

Product variants for liability insurance, namely Public Liability, Automobile Liability, Employers Liability, Workmen Compensation, Professional Indemnity, Environmental Pollution Liability, Directors & Officer Liability, and Moveable All Risk.

2. MSIG

PT Asuransi MSIG Indonesia is part of MSIG Holdings. Even though the name is similar to MSIG Sinarmas, actually this insurance is not part of Sinarmas. Having been in operation for 100 years, MSIG has a good solvency ratio of 236 percent.

The policies offered by MSIG include Comprehensive General Liability, Product and Obligation to Complete Operations, and Custody Responsibility.

3. Askrindo

Askrindo , which is known as a provider of credit protection, also has liability insurance, you know! Here are some of the policies they provide; Public Liability, Employers Liability, Comprehensive General Liability, Directors and Officer Liability, Professional Indemnity and Air Carrier Liability Insurance. Contractor liability insurance nj. Professional liability insurance for interior designers. Commercial liability insurance broker. Business liability and workers comp insurance.

To get product references with financial guarantee benefits that suit your needs, you should consult with a licensed insurance agent.

4. Sinar Mas 

Sinarmas also offers various types of liability insurance to protect you from various legal risks.

Some of the types of insurance available include Public Liability, Employers Liability, Comprehensive General Liability, D & O Liability, Professional Indemnity, and Air Carrier Liability Insurance.

Sinarmas liability insurance also offers compensation that is given in the amount of the claim submitted by a third party, a maximum of the limit of the insurer’s liability specified in the policy. This means that you don’t have to worry about financial losses that may arise from lawsuits, because insurance will cover these costs.

5. ASEI

Another option for liability insurance is ASEI Insurance, which is an insurance company transformed from PT Asuransi Ekspor Indonesia (Persero) which focuses on general insurance and guarantees.

Some of the types of protection available include:

• Director’s/Employer’s and Officer Liability (DOL) Insurance,
• Public Liability Insurance (PL),
• Comprehensive General Liability Insurance (CGL),
• Combined Liability Insurance (CLI),
• Stevedoring Liability Insurance (SL),
• Port and Terminal Liability Insurance (PTL),
• Employer’s Liability (EL) Insurance,
• Automobile Liability Insurance (AL), and
• Workmen’s Compensation Insurance.

By taking one or several of these types of protection, you can feel confident that your business is protected from lawsuits that may arise from your business activities.

Asuransi ASEI also provides compensation against the risk of lawsuits from third parties to customers.

Be careful before buying! These are tips you need to know in choosing liability insurance

Before deciding to buy liability insurance, there are a number of things you need to do, the following are some of them.

1. Company background research

Do a little research on how the company’s track record goes back. Are you obedient in paying previous customer claims?

You can get this information through the Google search engine or ask an insurance broker like Lifepal .

2. Read the company’s financial statements

You don’t want the insurance company we entrust to fail to pay like Jiwasraya? Therefore, first look at the financial statements of the insurance provider companies, is the solvency ratio above 120 percent? What about the assets they have, are they large enough?

3. Choose a product with clear and complete policy documents

Don’t want to buy a cat in a sack! Understand carefully the policy you received before signing. If it’s not clear, ask further with the agent offering it.

This is a series of information about liability insurance. Still want to ask more? Lifepal has a free consultation facility that you can use. Contractor liability insurance nj. Professional liability insurance for interior designers. Commercial liability insurance broker. Business liability and workers comp insurance.

 Insurance is one of the solutions to control the risk of overspending, from health, travel, business, employees, assets, houses or property, and vehicles to education, credit and agriculture.

Don’t forget to prepare yourself and financially with insurance so that your pocket doesn’t break due to unexpected events!

Before buying an online insurance product , you should first study the functions and understanding of insurance , the terms in the policy and get to know the various types of insurance in Indonesia so that you can get optimal benefits from the insurance of your choice later.

There’s nothing wrong with setting up an emergency fund that can be used not only for sudden needs, but also for unexpected health-related expenses.

You can use the Emergency Fund Calculator below to calculate an emergency fund according to your age.

Questions about liability insurance