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Global Liability

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What is Global Liability?

As a legal entity, a business is liable for the damage it causes to others. Several types of damage can be caused:

  • Bodily injury
  • Material damage
  • Financial losses

Liability insurance

In the event of a claim, liability insurance aims to cover the damages (including the costs of the procedure – privately agreed or court-ordered appraisal, etc.) of the compagny involved.

However, the purpose of the insurance may vary:

  • Public liability
  • Product liability
  • Professional

Public liability insurance

The loss compensated by civil liability cover is independent of the profession carried out, the services provided and the products sold.

Here, the risk is linked to the day-to-day operations of the business.

Civil liability cover also includes "Employer's gross negligence" cover in the event of a social security claim arising from an accident at work or a work-related illness suffered by an employee.

What if it were you ?

IT professionals

"FLOWERPOT INSURANCE" A CLAIM IS FILED AGAINST THE BUSINESS BY A THIRD PARTY WHO WAS INJURED AFTER BEING STRUCK BY A POORLY ATTACHED COMPANY SIGN WHICH FELL ON THEIR HEAD.

Gross negligence of the employer

A WORKER WORKING ON SCAFFOLDING MORE THAN 10 METRES HIGH FORGETS TO FASTEN THEIR SAFETY HARNESS. THEY FALL FROM THE SCAFFOLDING AND ARE FATALLY INJURED. THE BUSINESS IS HELD LIABLE FOR FAILURE TO COMPLY WITH ITS SAFETY OBLIGATION (PERFORMANCE OBLIGATION) UNDER THE LABOUR CODE: THE EMPLOYER WAS OR SHOULD HAVE BEEN AWARE OF THE DANGER TO WHICH THE EMPLOYEE WAS EXPOSED. THE BUSINESS MAY BE HELD LIABLE FOR GROSS NEGLIGENCE OF THE EMPLOYER.

The amount of gross negligence cover must be at least €1,500,000 per claim and per insurance year.

Product liability

When you design, manufacture or sell a product, you are responsible for the quality of that product.

The supply of the product may result in damages such as: hidden defects / manufacturing faults, poor packaging, omissions in the instructions for use, maintenance fault.

Good to know

Two types of cover not to be overlooked:

  • Withdrawal costs, incurred by third partieswhen a decision is made to recall a product.
  • The costs of removal/replacement incurred by third parties : removal of the defective product and replacement of the product.
What if it were you ?

A bacteria in the soup

A BATCH OF YOGHURT SOLD IN A SUPERMARKET HAS BEEN INFECTED BY A BACTERIUM. THE AUTHORITIES REQUIRE THE PRODUCT TO BE WITHDRAWN. THE PRODUCT LIABILITY INSURER WILL COVER THE BUSINESS’ COMMUNICATIONS COSTS, THE COSTS OF WITHDRAWING THE INFECTED YOGHURT AND THE COSTS OF DESTROYING THE PRODUCT.

A flammable server

AN IT COMPANY INSTALLS A SERVER ON THE PREMISES OF ONE OF ITS CLIENTS FOR THE PURPOSES OF THE CLIENT'S E-COMMERCE SITE. DUE TO A FAULT IN ONE OF THE SERVER’S PARTS, A FIRE STARTS AND SPREADS THROUGHOUT THE PREMISES. THE IT COMPANY IS LIABLE FOR THE FAULT IN ITS PRODUCT, WHICH CAUSED DAMAGE TO THE CLIENT.

Professional liability

Professional liability is the obligation for businesses to compensate for damages related to their intellectual services (service companies, consulting firms).

Professional liability cover mainly covers non-consecutive non-material damages, i.e., financial losses caused to a third party following damage.

Non-consequential non-material damages cover is the main cover for all companies providing intellectual services.

Good to know

When you provide a design service that is not followed up by implementation, you need to insure yourself against the risks associated with professional liability.

What if it were you ?

IT professionals

AN IT COMPANY ISSUES SECURITY RECOMMENDATIONS DURING AN AUDIT. THE CLIENT FOLLOWS THESE RECOMMENDATIONS AND LOSES ALL THEIR DATA FOLLOWING A COMPUTER ATTACK WHICH EXPLOITED A FLAW NOT IDENTIFIED BY THE AUDIT. THE IT COMPANY INCURS PROFESSIONAL LIABILITY AS A RESULT OF THE ERROR MADE DURING THE AUDIT.

Real estate agents

DURING A PROPERTY SALE, THE REAL ESTATE AGENT COMMISSIONED BY THE BUYER FAILS TO PROVIDE SOME OF THE INFORMATION THAT THEY ARE LEGALLY REQUIRED TO PROVIDE. THE BUYER, DISCOVERING THE ERROR, WILL BE ENTITLED TO HOLD THE AGENT LIABLE FOR FAILURE TO ADVISE.

In the event of a claim by a third party, the amount of cover taken out may be insufficient.

The insurer will compensate you for the amount covered by your insurance policy and you will be obliged to pay the difference.

Example :

An order to pay damages of €1,000,000

Amount of cover: €500,000 per insurance year and per claim

Payment by the business from its own funds: €500,000

It is important to correctly determine the amount of cover according to:

  • The biggest client
  • An amount set by a client in a contract (liability limit)
  • Turnover

Did you know …?

When services or products are sold in the United States or Canada, the insurer must be informed.

In fact, convictions in these countries are much more frequent than in France and this increases the risk.

There are two types of turnover in this case :

  • My company is based in France and I do business with clients based in the USA or Canada => I need to extend the cover of my insurance policy to these territories.
  • My company is based in France and I have a subsidiary in the United States or Canada => I need to take out insurance locally.