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Casualty insurance is one of the most commonly used types of insurance serving the purpose of losses arising out of direct accidents. One of the most popularly casualty insurance includes auto liability insurance protecting the car owners from losses arising out of car accidents. Marine insurance for protection from losses at sea and shipwrecks are some of the other forms of casualty insurance. It should be noted that insurance forms like property, health, and life insurance are strictly excluded from the definition of casualty insurance. Typically casualty insurance is used to refer to a liability but in some cases insurance providers may also include surety as well. On the other hand liability insurance in most of the cases is part of the general insurance system relating to risk financing. Casualty insurance was very popular among various companies having same risk. These companies came together and formed a group which contributed towards a self-help fund. This fund is used for compensating members ensuring a loss. However, the modern system of insurance relies more upon dedicated insurance providers offering the people protection in turn of premium.

 

Liability insurance is formulated to provide protection against claims made by third parties. In this case the payment is made to a person suffering losses and is not a part of the insurance contract rather than the insured person. Traditionally all forms of contractual liabilities and intentional damages are not covered by a liability insurance. The insurance provider has full rights to defend the insured person whenever a claim is made. The cost of such legal protection and defense is not affected or restricted by any of the insurance policies. This is very helpful in cases which require long trails for the determination of the amount of damage or fault.

Classes of liability insurance

Liability insurance is mandatory in most of the countries especially for those who are at risk arising out of being sued by third parties. Some of the classes protected by liability insurance include vehicle drivers, people offering employment, constructors, and manufacturers of products which can be harmful along with people offering professional service to the public. The main motive is to provide the above classes protection as they are engaging in activities which put others at risk or loss or injury. Therefore, liability insurance is very helpful in case if the activity undertaken do cause any form of damage or loss to others, funds will be available to compensate others.

Employers: Several laws have been formulated for the protection of employers against injury caused to the employees during employment. Most of the countries out there restrict the insurers from imposing any unreasonable condition relating to liability. In most of the countries where this form of insurance if not made mandatory it is often seen that organizations get bankrupted when there are claims not covered by some kind of insurance. It should also be noticed that most of the product and public liabilities are covered using the same kind of liability policy. Some of the other forms of risks which are involved during insurance include property damage or bodily injury caused by any kind of indirect or direct actions on the part of the insured.

Product: This is one of the classes not made mandatory in most of the countries out there but very much prevalent in UK. EC directive on Product Liability and the Consumer Protection Act of 1987 make it mandatory for the suppliers of goods or the manufacturers to get into some kind of product liability insurance as a part of the combined liability policy.

Public liability: Industry and trading organization are always concerned with several activities and processes having potential affect upon third parties like visitors, public, trespassers and even the suppliers or the contractors. It mainly depends upon the country as to whether both public liability insurance and employers liability insurance has been made mandatory by law or not.  Most of the organizations that have occupied large premises leading to huge amount of third party communication are often exposed to greatest amount of public liability risks. This risk is dramatically increased if the third parties are allowed consumption of alcohol or some form of sporting event is included. Industries like cleaning and security is always considered a very high-risk job by the underwriters. Underwriters ever refuse to insure the liabilities if these kinds of industries or even choose a large deduction in the compensation claims. On the other hand common law principles are used for dealing with claims. These law principles have been formulated after long history of litigation and case law. This is evident in a country like North Korea; people found without proper liability insurance have to face actions which can range from seizure of property, political exile, or even flogging.