General Liability

A general liability policy covers the Insured’s liability to third parties arising out of Injury or Damage caused by the Insured in the course of its business activities. Although this is a very broad explanation, the cover is subject to exclusions many of which are covered under the optional sections and extensions of the policy.

Question: What cover does Products Recall extension provide?
Answer:

Should a product’s potential for harm be discovered after it has left the Insured’s custody this insurance will pay for the cost of recovering the product or paying for it to be destroyed, if that is cheaper.

  • The Insurer’s consent is required before initiating the Recall
  • Covers media and communication costs to advertise the Recall
  • Excludes the cost of repairing the Product
  • Excludes deliberate breach of laws
  • Excludes failure to take reasonable precaution to prevent claims
Question: What cover does the EEC Liability extension provide?
Answer:

It provides a form of professional indemnity insurance for tour organisers. It indemnifies them against travellers who allege that the Insured (or the Insured’s suppliers) were guilty of misrepresentation during the sales and booking process

  • Applies to tour organizers (hospitality sector)
  • Accommodates legislation in the European Union
  • The tour organizer is liable despite that it was a supplier (such as an airline) which did not perform properly (strict liability)
  • According to the EC Directive on package travel, the tour operator cannot contract out of this liability.
Question: What does the Extended Reporting option cover?
Answer:
  • The Extended Reporting option enables the Insured to continue lodging claims against a claims-made policy after the Period of Insurance has ended. This extended claim lodging period is usually subject to a limit of 36 months.
  • The event giving rise to the claim must have occurred after the Retroactive Date but before the end of the Period of Insurance. Events arising during the extended period are not covered, the cover is only for claims that the Insured becomes aware of during the extension due to events that occurred before the extension started.
  • The option must be exercised within 15 days of non-renewal of the policy and is subject to an additional premium. Usually the extended reporting option is only available if the Insured is unable to secure similar alternative insurance.
  • The Insurer will treat claims made during the Extended Reporting Period as if they had been made on the last day of the Period of Insurance.
  • Sometimes an Extended Reporting Period is sold together with a short period policy. For example: during March 2010 the Insured held an exhibition. The Period of Insurance matched the duration of the exhibition (one month). However, the first of the injured visitors only notified the exhibitor of their injuries in the months after the exhibition ended. 
Question: What cover does the Professional Fees extension provide?
Answer:

It covers the cost of professional fees incurred by the Insured in producing information required by the Insurers to investigate the claim.

  • Is this extension important? It is unlikely that the Insured will incur costs in proving the claim. The onus is on the third party making the claim to prove their claim. The Insured could use that ‘proof’ provided by the plaintiff to substantiate the claim to the Insurers.*
Question: What cover does the Exhibitor’s Liability extension provide?
Answer:

It covers Injury or Damage to third parties arising out of the

  • Erection, dismantling and operation of a stand at an exhibition venue
  • Transportation of materials and products for the exhibition
Question: What cover does the Claims Preparation Costs extension provide?
Answer:

It covers the cost incurred by the Insured in producing information required by the Insurers to investigate the claim.

  • Is this extension important? It is unlikely that the Insured will incur costs in proving the claim. The onus is on the third party making the claim to prove their claim. The Insured could use that ‘proof’ to substantiate the claim to the Insurers.
Question: What cover does the Lateral Support extension provide?
Answer:

It covers damage to third party property as a result of the Insured (or the Insured’s contractor) accidentally or negligently removing or weakening a building support structure.

Question: What cover does the Contractor’s Liability extension provide?
Answer:
  • It covers damage to third party property while the Insured is engaged in construction works. For example, renovations to the Insured’s premises
  • Although damage to third party property is ordinarily covered by the policy, the policy does require that the Insured declares any change that materially increases the risk of a claim. Building alterations is such an event.
  • The policy only provides cover for liability arising out of the Insured’s business description disclosed on the policy schedule.
  • This extension is not necessary if the Insured is a builder, electrician, plumber, etc.
    • If the Insured’s normal business is construction related work, then this business description will be reflected on the policy schedule. In that case, damage to third party property, arising out of the Insured’s ‘normal’ business activities will be covered in terms of the rest of the policy.
  • This extension provides no cover for:
    • The property being worked on
    • Losses arising out of the intentional removal of support structures.
  • The Insured’s building contractor ought to have its own contract works policy. The Camargue General Liability policy only covers construction damage which is not covered by a contract works policy.
    • A contract works policy generally provides cover for the property being worked on, temporary works (e.g. the worker’s toilets) and sometimes also plant and machinery.
  • Example: During renovations the Insured’s contractor is drilling through the wall separating the Insured from his neighbour. The drilling process goes badly wrong and both the wall and the neighbour’s expensive mainframe computer are damaged.
    • Although the wall belongs to a third party (i.e. the landlord) it is not covered (there is no cover for the property being worked on)
    • The neighbour’s mainframe computer is covered
Question: What is Products Inefficacy Liability?
Answer:

It provides cover for the financial loss that a third party sustains when a product supplied by the Insured does not fulfil its intended function.

  • It pays the difference between the financial value of what the third party’s tangible property should have been and what it was as a result of the Insured’s defective product.
  • Does not cover the repair, replacement or recall of the product itself
  • Does cover the reasonable costs of avoiding or mitigating the effects of such failure
  • For example, a fertilizer supplied by the Insured is missing an important ingredient. As a result the farmer’s crops only produce 10% of their expected yield. The Products Inefficacy extension would cover the financial value of the missing 90%.
    • The cost of supplying the missing ingredient is not covered – that would be the subject of a Products Guarantee claim.
Question: What cover is provided by the Pure Economic Loss extension?
Answer:
  • This extension covers losses of a purely monetary nature where there was no damage to tangible property or injury to people.
  • This is sometimes also referred to as a pure financial loss.
  • The Pure Economic Loss extension excludes liability arising out of:
    • Work requiring special skill or knowledge (this is the function of Professional Indemnity cover or the Errors and Omissions extension)
    • Injury or damage to tangible property
    • Dishonesty or misrepresentation
    • Breach of contract, copyright, defamation
    • Anti-competitive behaviour
    • The insolvency of the Insured
    • Claims made by an employee against the Insured (e.g. An unfair dismissal is an example of a pure economic loss, but unfair labour practices are excluded.)
    • Cover provided in terms of a Directors & Officers’ Liability policy
    • An association with the Insured (e.g. the Insured’s trading partners suffer a loss of sales when the Insured falls victim to bad media publicity)
    • Any product-related claim or claim related to the supply of a product
    • Liability assumed by agreement. (e.g. the Insured agrees to pay a third party R100. That outstanding payment is not covered).
    • Protests by the Insured’s employees
Question: What does the Custody and Control extension cover?
Answer:
  • This extension covers damage to third party property while it is temporarily in the Insured’s possession for any reason (not just repair)
  • While the third party property is in the Insured’s possession, there is cover for damage which arises out of work being done on it
  • This contrasts to the Public Liability section which provides cover for third party property in the Insured’s care, provided that:
    • It is in the Insured’s custody for the purposes of being worked on
    • The damage is not due to work being done on third party property
  • The Custody and Control extension excludes:
    • Vehicles being repaired
    • Property more specifically insured elsewhere
  • This extension not only covers third party property whilst at the Insured premises, but also while the Insured is transporting it.
Question: What cover does the Carriers’ Liability extension provide?
Answer:

It covers the Insured’s liability for damage to third party property during transport, loading or off loading.

  • The intention is that the third party has its own insurance that will cover damage to property while in the Insured’s care. The carrier’s liability extension will only respond if the third party’s own insurance does not cover the loss.
  • The Insured is required to make a reasonable effort to ensure that the third party has secured suitable cover for the property while in the Insured’s care.
Question: What cover does the Warehouseman’s Liability extension provide? (Bailee liability)
Answer:

It covers damage to third party property while that property is at the Insured’s storage facilities. The risk covered is sometimes called ‘bailee’s liability’.

  • The intention is that the third party has its own insurance that will cover damage to the property while at the Insured’s storage facilities. The Warehouseman’s Liability extension will only respond if the third party’s own insurance does not cover the loss.
  • The Insured is required to make a reasonable effort to ensure that the third party has secured suitable cover for the property while at the Insured’s storage facilities.
    • It is important to remember that this cover is not intended as a substitute for property insurance. It is priced lower than the equivalent property damage insurance.
  • The cover under this extension also applies while the goods are being loaded or unloaded from the storage facilities.
  • The Warehousemen’s Liability extension excludes losses arising out of:
    • Mechanical or electrical derangement
    • Dishonesty of the people to whom the goods were entrusted
    • Delay in the return of the stored property
    • The Insured’s activities as clearing and forwarding agents
    • Money or other high value items
    • Perishables and refrigerated goods
Question: What cover does the African Territories (DIC/DIL) extension provide?
Answer:

Where the Insured’s activities in Africa (outside South Africa) are covered by locally purchased liability policies, this policy will only respond once the indemnity limit of the locally purchased policy has been exhausted.

  • If the scope of cover of the local policy differs from the Camargue policy then:
    • If it is wider, then the Camargue policy will not respond to those claims outside the scope of cover provided by the Camargue policy.
    • If it is narrower, then the Camargue policy will act as primary insurance for those events not covered by the local policy
  • The Camargue policy will only respond up to the point of the original limit of the Camargue policy. For example, the limit of the local policy is R1m and the limit of the Camargue policy is R5m. In the event of a R10m claim, the Camargue policy will pay R4m.
Question: What cover does the Advertising Liability extension provide?
Answer:

It covers any unintentional defamation or breach of copyright made in the course of advertising or merchandising. It does not cover claims arising out of:

  • An advertising agency owned by the Insured.
  • The cost of replacing the advert
  • An incorrect description of the goods, services or price
  • Malice or fines or penalties
Question: What cover does the Breach of Copyright extension provide?
Answer:

It covers legal costs in defending an alleged breach of copyright or patent.

  • Only covers defence costs.
    • It does not provide legal pursuit costs to enforce the Insured’s rights
    • The amount of any award against the Insured is not covered.
  • The breach must have occurred during the Period of Insurance. No Retroactive Date applies.
  • Excludes any breach of professional duty.
    • The intention is to grant this cover where an inadvertent breach occurs incidental to the Insured's activities and not where the nature of the Insured's business (profession) entails services to his customers which of necessity involves patents or advice related to copyrights.
    • In other words, a patent attorney would not be covered under this extension. There would however be cover for a manufacturer who gets sued for accidentally using someone else’s idea in their processes.
  • Excludes acts not committed in good faith and defamatory statements.
Question: What cover is provided in terms of the Errors and Omissions extension?
Answer:
  • The Errors and Omissions (E&O) extension provides cover for liability arising out of the conduct of the Insured’s professional activities. The cover is very similar to professional indemnity insurance
  • The cover under the E&O extension is mainly for pure economic loss. There is no cover for Injury and the cover for Damage is very limited
    • Since Injury is excluded, medical practitioners cannot use the E&O extension as a substitute for their professional indemnity policy.
    • If a safety consultant gives bad advice and people are injured on a construction site, then there is no cover because of the injury exclusion.
  • The following example serves to illustrate the difference between Defective Workmanship and E&O. The Insured is a courier service which makes a delivery to the wrong address. 
    • E&O: Examination question papers are incorrectly delivered. Although they are returned undamaged, it is still necessary to reset the examination. This is a pure economic loss and would be an E&O claim.
    • Defective Workmanship: Ordinary (blank) printer paper is delivered to the wrong address. As a result it is stolen. This Damage (theft) arose out of the Insured’s workmanship.
  • This extension was designed for businesses that may have an incidental professional exposure where billable advice is not their core business. In other words, it is not intended for companies like lawyers who charge for their advice.
    • Camargue does not provide this cover to professionals, e.g. medical practitioners, attorneys, accountants, engineers, financial advisors, insurance activities, etc.
  • The E&O extension excludes claims arising out of
    • Products or the cost or recalling products
    • Pollution
    • The ownership or possession of property. This includes vehicles. So if the Insured’s professional activities include the operation of transportation service, vehicle related claims remain excluded.
    • Penalties or other performance guarantees (E.g. no cover for not meeting a deadline or for breaching a confidentiality agreement)
    • Financial advice, insurance
    • Incorrect cost estimates
    • Medical treatment
    • Dishonesty
  • The cross liabilities provision does not apply to this extension
Question: What cover does the Employee to Employee extension provide?
Answer:

Provides cover for claims-made by one employee against another arising out of events transpiring in the course of employment

  • Excludes claims arising out of drunkenness, firearms or AIDS
  • This extension is almost always automatically included as part of Employer’s Liability extension
Question: What cover does the Employer’s Liability extension provide?
Answer:

Provides cover for injury to employees arising in the course of their employment

  • Excludes claims arising from prolonged exposure
  • Excludes cover provided by the Compensation for Occupational Injuries and Diseases Act No 130 of 1993 (COID Act)
  • It automatically includes the Employee to Employee extension.
    • This extension provides cover for claims-made by one employee against another arising out of events transpiring in the course of employment
    • Excludes claims arising out of drunkenness, firearms or AIDS
Question: What cover does the Defamation extension provide?
Answer:

Defamation is a false statement of fact made to someone other than the victim which harms the reputation of victim. The extension provides cover for defamatory statements made by the Insured, whether written or verbal

  • Excludes claims arising out of wrongful arrest or any publication, radio or television broadcast 
  • Often has a sub-limit of R250,000
  • Defamation can include acts such as the exhibition of a picture
Question: What does the Wrongful Arrest extension cover?
Answer:
  • When the Insured causes a person to be wrongfully arrested this extension provides cover for
    • False imprisonment
    • Assault arising before being placed in police custody
    • Defamation arising out of arrest, false imprisonment or the investigation of theft
  • Excludes
    • Claims by parties other than the person actually arrested
      The policy would not pay for the losses that third parties or family members allege they have suffered as a result of the wrongful arrest.
  • Unfair labour practices
    The policy would not pay a CCMA award against the company for dismissing the arrested employee, or if the employee claimed constructive dismissal. The Insured would need to purchase separate Employer’s Practice Liability (EPL) to provide this cover
  • Generally has a sub-limit of R250,000
  • The Wrongful Arrest extensions is particularly appropriate where the Insured employs security guards (e.g. retail shops where shoplifters are frequently apprehended)
Question: What does the Statutory Defence Costs extension cover?
Answer:
  • The policy generally excludes liability arising out of criminal action. However this extension provides cover for the legal costs in defending a criminal action brought against the Insured.
  • The criminal action can arise out of any law except
    • The Companies Act
    • Labour laws
    • Laws relating to vehicles, aircraft and watercraft
  • The definition of the Insured includes the Insured’s employees.
  • For example, the Insured’s workshop foreman was criminally charged for breaching the Occupational Health & Safety Act when staff members were injured because he allowed them to work without protective clothing. The policy paid the foreman’s legal costs, even though he was found guilty.
  • If the Insured is found guilty then:
    • The Insured does not need to repay the defence costs
    • The Insured will not pay any part of the fine or penalty. For an insurer to pay the Insured’s fines would be contra bonos mores (against the public interest).
    • The Insurers will not pay for the costs of an appeal unless its legal counsel believe the appeal will succeed.
  • This section has its own limit which is often R250 000.
Question: What does Section D - Negligent Advice cover?
Answer:
  • This section covers the Insured against liability for Injury or Damage arising out of inaccurate or inadequate advice or information of a technical nature when promoting its products or services
  • This advice must be given for free - if the customer was charged for the advice then this section provides no cover
  • Excludes defamation, financial services, cost estimates or claims arising from the Insured’s insolvency
  • If Negligent Advice cover is purchased, the Products Liability/Defective Workmanship section should also be purchased (because Negligent Advice on its own does not cover products related liability)
  • Example: Dispensing advice given by a pharmacist is covered, but a doctor’s advice is not. This is because the doctor charges for the advice, but a pharmacist’s advice is not specifically charged for. 
Question: What does Section C - Products Liability and Defective Workmanship Liability cover?
Answer:
  • Cover under this section only starts after the Insured has handed the product or repaired item over to the customer
    • If the product caused a loss while it was still on the Insured’s premises then it is a Section A - Public Liability claim
  • Product Liability covers the Insured’s liability for Injury or Damage caused by the harmful nature of a product
  • Defective Workmanship covers the Insured’s liability Injury or Damage arising out of negligence in work done on a product
    • The product need not have been supplied or sold by the Insured
    • The cost or repairing a product supplied by the Insured is not covered
  • This section includes liability for pollution arising out of the product.
  • The term ‘product’ includes the product’s containers and labels
  • Section C excludes other types of products liability cover such as:
    • Products Inefficacy – where the product causes loss to a third party because it does not perform as reasonably expected
    • Products Recall – will pay for the cost of recovering the product or for it to be destroyed, if that is cheaper, should the product’s potential for harm be discovered after it has left the Insured’s custody
    • Products Guarantee – pays the Insured’s liability for the cost of removal, alteration, replacement or repair of the Insured’s products that have failed to perform their intended function
    • Although Products Guarantee liability is not available in this policy, both Products Inefficacy liability and Products Recall are available as extensions
  • Excludes liability arising out of Negligent Advice
Question: What does Section B – Pollution Cover?
Answer:

This section covers liability for Injury or Damage arising out of pollution.

  • The policy definition states: "Pollution" means the emission, discharge, dispersal, disposal, seepage, release or escape of any liquid, solid, gaseous or thermal irritant, contaminant or pollutant into or upon land, the atmosphere or any water-course or body of water or the generation of smells, noises, vibrations, light, electricity, radiation, changes in temperature or any other sensory phenomena, but not fire or explosion
  • Note that the definition is very wide an includes smells, vibrations, light and temperature changes
  • Pollution is covered only if Section B – Pollution has been selected
  • Section C – Products Liability also needs to be selected if the Insured requires pollution cover arising out of products or defective workmanship (since Section B – Pollution does not provide cover for pollution arising from products)
  • A Retroactive Date would not apply to the pollution section because cover is limited to events which occurred during the Period of Insurance
  • Cover is subject to the Insured taking reasonable precautions to prevent pollution
  • The claim must arise out of a sudden and unforeseen event
  • The claim does not need to be as a result of an accident. The mechanic’s assistant intentionally poured dirty engine oil down the drain when he misunderstood the mechanic’s instruction.
Question: What does Section A – Public Liability cover?
Answer:
  • Covers the Insured’s liability for Injury or Damage arising in the general course of business
  • For example:
    • A visitor to the Insured’s premises is injured when the Insured does not draw her attention to soap on the floor
    • A fire at the Insured’s property spreads to a neighbour’s property
    • While repairing a pipe, a plumber causes an electric fire by accidentally flooding an electricity distribution box
  • Some of these aspects of the cover are dealt with quite specifically by the policy, for example:
    • Tenants Liability covers damage to premises that the Insured is occupying
    • Employees and visitors clothing and personal effects are covered
    • Government property whilst on the Insured’s premises is covered
    • Any property temporarily in the Insured’s care for work thereon is covered. The actual part being worked on is not covered if the damage arises out of such work (see the Custody and Control extension and Defective Workmanship section)
  • Public Liability excludes:
  • The Public Liability section is also referred to as the ‘General and Tenants’ or the ‘Property Owners and Work Away’ liability section
  • The policy would pay:
    • Pollution, Products and Negligent Advice as they can be covered by other sections of the policy
    • Most liability arising out of the possession or use of a vehicle, aircraft, hovercraft or watercraft
    • Property belonging to the Insured or in the Insured’s care
    • The actual amount claimed as compensation
    • The Insured’s legal and other costs incurred in defending the matter
    • Costs, fees and expenses of the claimant awarded by the court (or agreed to by the Insurers as an out of court settlement).
Question: What is a Public Liability Policy? (Overview of cover)
Answer:

The policy covers the third party’s damages, including their legal expenses awarded by the court. It also covers the Insured’s own legal expenses. If an out of court settlement is reached this is also covered, provided that the Insurers agreed to this.

 

The cover provided by the policy is found in four sections and a number of extensions. The following table provides a brief summary of the cover.

 

 

Covers the Insured’s liability for:

Sections

Public Liability

Injury or Damage arising in the general course of business. Many claims, if not most, are paid in terms of this section

Pollution Liability

The accidental release of pollutants into the environment

Products Liability and Defective Workmanship

Injury or Damage arising out of the harmful nature of the Insured’s products or out of the Insured’s negligence while working on a product

Negligent Advice

Injury or Damage arising out of free advice given in promotion of the Insured’s products or services

Extensions

Statutory Defence Costs

Legal expenses in defence of a criminal action

Wrongful Arrest

Wrongful arrest, false imprisonment and any related assault caused by the Insured

Defamation

Defamatory statements whether written or verbal

Employers Liability

Employees injured in the workplace