In whatever field you operate, no matter how carefully and organized you manage your business, you can end up in the situation of causing material damage or bodily injury that entails compensation and expensive legal actions. The most important benefit of a liability insurance is that it pays compensation to individuals or companies for such risks. Civil liability insurance is divided into mandatory and optional.
Mandatory liability insurance is:
- Motor Third Party Liability Insurance (MTPL-RCA). Car owners, both individuals and legal entities are required by law to have MTPL. The police cover the damages of the injured party following a car accident for which you are responsible.
- Professional Liability Insurance. Mandated by law for certain professions such as doctors or pharmacists, who need malpractice insurance.
- Civil Liability Insurance of Directors and Administrators (D&O) is mandatory in accordance with Law no. 31/1990 for directors and executives of joint stock companies.
The optional civil liability insurances for companies are: Legal Liability Insurance, Professional Liability Insurance not required by law, Liability Insurance of Directors and Administrators (D&O) for categories not required by law. For individuals, the most important are: The tenant’s Civil Liability Insurance against the Landlord and the Property Owner’s Civil Liability Insurance against his Tenants.
Legal Liability Insurance
Third party liability insurance covers extreme situations in which you accidentally cause property damage and personal injury or even death in the course of your daily work. The insurance covers the expenses that the company will end up paying to the injured person. Whether it is a beauty salon, an advertising agency, a bakery or a car service, unforeseen situations can always occur and seriously affect the future of the company, from reputation to financial damage.
You have coverage for the specific risks in case the incident is committed accidentally and unintentionally by the insured contractor: material damage, bodily injury or death. Groupama grants compensation and covers the costs resulting from an unforeseen incident, within the limits of the amounts stipulated in the contract for:
- the amounts that the insured is obliged to pay, based on the law, to the injured person
- court costs incurred by the insured or the injured third party.
Example:
A customer injures himself in the freshly washed glass door or a tourist/customer slips on the wet floor and breaks his leg. Or a car service that, due to a malfunction in one of the equipment, causes damage to a car in the workshop.
Professional Liability Insurance
In any type of business, there is always the possibility of someone making a mistake, by omission or even professional negligence, which could cause financial damage to customers or employees. The professional civil liability policy provides financial support for these moments. A liability insurance policy for professional misconduct provides business continuity when an error is made in a project in the company’s portfolio.
What types of professional liability insurance are?
There are various types of professional liability insurance designed to cover the specific needs of each field of activity. The law requires professions such as lawyers, notaries, doctors, pharmacists, architects, insurance brokers, etc to have a professional liability insurance in order for them to practice in the chosen field.
At Groupama you can conclude Professional civil liability for:
- Architects and engineers in the field of construction
- Accounting, financial audit and tax consultancy
- Legal activities (for example lawyers, bailiff)
- Insurance agents and brokers
- Insolvency practitioners, Evaluators and technical experts
- Service and consultancy activities in information and communication technology
- Medical practice (malpractice insurance)
This type of insurance fully covers the amounts resulting from culpable acts such as: errors or omissions, unintentional violation of professional duties or negligence, committed during the act of professional service:
- the amounts established on the basis of a court / arbitral award or amicable settlement
- defense costs (court costs and costs of external consultants)
- expenses with compensation limitation services (fees and / or costs required for the services of an external lawyer or consultant, requested in order to minimize the risk)
- expenses for restoring documents
Example:
If you are a construction contractor, it may happen that due to a design error, the financial support for the remedy of the improper electrical installation is fully covered.
If you provide legal services and do not file a lawsuit in time, you can end up compensating the client who lost the lawsuit.
These examples of situations can be covered by insurance.
Liability insurance for directors and executives (D&O)
It is a type of insurance policy that helps to overcome undesirable situations when the decisions taken by the management have a negative impact on the company causing damage to customers, shareholders, employees, creditors, state authorities or other injured party. Insurance helps protect the assets and reputation of the person involved or the business.
This type of insurance policy can be concluded for people in management positions, for employees but also for the company, as a legal entity. Some examples of insured persons can be: administrator, member of the company’s management, member of the company’s supervisory board, executive director or executive director of an external entity, employees, when they are sued as co-accused, the company, when it is required or permitted by law to indemnify the above for claims made directly to them.
What risks does it cover?
The risks to which the company is exposed through any action, error or omission, erroneous statement, breach of duties or negligent act, committed by the insured in the exercise of a management function, are covered. The amounts that the company is obliged to pay based on a court / arbitration decision or amicable agreements between the parties involved are fully covered:
- The amounts established as compensation, defense costs (investigation and defense costs)
- Costs related to compensation limitation services (fees and / or costs for the services of a lawyer or external consultant specialized in the field of activity in which you work, requested in order to minimize the compensation)
- Emergency costs (investigation costs and equipment used in emergency situations)
Challenges and difficult times are part of any entrepreneur’s journey – you can’t avoid them or predict them, but you can insure them with the right policy. We hope this material has helped you discover it and better understand what it can do for you.
Take the step towards an insured future and ask for an insurance quote.
For additional information, you can consult the virtual assistant Amelie (24/7) on groupama.ro, you can write to relatii.clienti@groupama.ro, you can call AloGroupama 0374.110.110 (Monday – Friday, between 8:00 – 18:00) or contact the Groupama network of sellers and partners.