Liability Insurance Glossary

Understanding liability insurance requires familiarity with its terminology. This glossary clarifies the key terms related to Product Liability Insurance, Commercial General Liability Insurance, Contractual Liability Insurance, and Public Liability Insurance.

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Liability from Product or Service
Property damage or Bodily Injury
Medical & Legal Costs Covered

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  • Act of God: Unpredictable natural events like earthquakes or floods, typically excluded from standard liability coverage due to being beyond human control.
  • Additional Insured: A person or organization not initially named in the policy but entitled to coverage, often added through endorsement.
  • Aggregate Limit: The maximum amount an insurer will pay for all claims during a specific policy period, encompassing multiple occurrences.


  • Bodily Injury: Physical harm, illness, or disease suffered by a person, including resultant medical expenses and lost wages.
  • Breach of Contract: Violation of the agreed-upon terms and conditions of a contractual agreement, potentially resulting in legal action and financial damages.


  • Claims-Made Policy: A type of insurance policy that provides coverage only if the claim is made during the policy period, regardless of when the incident occurred.
  • Commercial General Liability (CGL) Insurance: A comprehensive insurance policy that covers a business against liabilities arising from accidents, injuries, and property damage occurring on the premises or during operations.
  • Completed Operations: Coverage provided under a liability policy for bodily injury or property damage that occurs away from the insured's premises and results from completed work or operations.
  • Contractual Liability Insurance: This insurance policy protects an insured party against liabilities assumed under the terms of a contract or agreement, such as indemnification clauses or hold harmless agreements.


  • Deductible: The initial amount of a covered loss that the insured must pay out-of-pocket before the insurance company will begin to cover expenses.
  • Defense Costs: The expenses incurred in defending against a lawsuit or claim, including legal fees, court costs, investigation costs, and expert witness fees.
  • Declarations Page: A section of an insurance policy that provides essential details about the policy, including the insured's name, policy period, coverage limits, deductibles, and premiums.
  • Deliberate Non-Compliance: The intentional act of failing to follow laws, regulations, or contractual obligations, which can result in significant legal penalties and loss of insurance coverage.


  • Endorsement: A written amendment or addition to an insurance policy that modifies the terms, conditions, or coverage provided by the policy.
  • Exclusion: Specific conditions, circumstances, or events that are not covered by the insurance policy and for which the insurer will not provide compensation or coverage.


  • Indemnity: The principle of compensation for losses or damages suffered by one party, provided by another party under the terms of an insurance policy or contract.
  • Insured: The individual, organization, or entity covered by an insurance policy, entitled to receive benefits or compensation for covered losses or claims.


  • Lessee: A person or organization that rents property from another party. The lessee is responsible for paying rent and following the terms outlined in the lease agreement.
  • Lessor: The owner of property who grants a lease to another party (the lessee). The lessor receives rental payments and maintains ownership of the property.
  • Legal Liability: The obligation or responsibility under the law to compensate for harm or injury caused to another person or property due to negligence or wrongful acts.
  • Liability Limits: The maximum amount of coverage provided by an insurance policy for covered liabilities or losses, typically specified as a per-occurrence limit and an aggregate limit.


  • Negligence: The failure to exercise reasonable care or caution that results in harm or injury to another person or property, forming the basis for liability in many insurance claims.


  • Occurrence: An event or incident that results in bodily injury, property damage, or financial loss, triggering coverage under an insurance policy.
  • Occurrence Policy: An insurance policy that provides coverage for claims arising from incidents that occur during the policy period, regardless of when the claim is made.


  • Personal and Advertising Injury: Liability coverage that protects against claims of harm arising from offenses such as libel, slander, defamation, copyright infringement, invasion of privacy, or false advertising.
  • Policy Period: The duration of time during which an insurance policy provides coverage, typically beginning on the policy's effective date and ending on its expiration date.
  • Product Liability Insurance: This type of insurance coverage protects manufacturers, distributors, retailers, and other parties against claims arising from bodily injury or property damage caused by products sold, manufactured, or distributed by the insured.
  • Product Recall: The process where a manufacturer or distributor withdraws defective products from consumers to address safety concerns, comply with regulations, or mitigate potential legal liabilities.
  • Property Damage: Physical injury to or destruction of tangible property, including buildings, vehicles, equipment, or other assets, caused by an insured event or covered peril.
  • Public Liability Insurance: This insurance coverage protects against claims for bodily injury or property damage arising from the insured's operations or premises and affecting members of the public, customers, clients, or visitors.
  • Pure Financial Loss: An economic loss that occurs without any accompanying physical damage to property or bodily injury. Examples include lost profits, business interruption, or a decrease in market value.
  • Public Entities: Organizations such as government bodies, municipalities, school districts, or public utilities that provide services to the public and are subject to specific liability and regulatory standards.


  • Reinstatement Clause: A provision in an insurance policy that allows the insured to restore the policy's coverage limits or benefits after a covered loss has occurred and a claim has been paid, typically subject to certain conditions or requirements.


  • Settlement: The resolution of a claim or dispute between the insured and the insurer, often involving the payment of compensation or benefits to the insured party.
  • Sublimit: A specific monetary or coverage limit within an insurance policy that applies to a particular type of loss or category of claims, often subordinate to the overall policy limit.


  • Tenant's Liability: The legal responsibility of a tenant for damages or injuries occurring on the rented premises. This can include property damage, injuries to third parties, and adherence to lease terms and local regulations.
  • Third-Party Liability: Third-Party Liability: The legal obligation of an insured individual or organization to compensate an outside party for injuries, damages, or losses resulting from the insured's actions or negligence. Liability insurance policies generally cover such liabilities, protecting the insured from financial losses due to claims from third parties.
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Policybazaar for Business - Comprehensive Liability Insurance - Customer Reviews
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4.3 April 09, 2023
Competitive Premiums
The premiums offered by PolicyBazaar for the Comprehensive General Liability Insurance are competitive, considering the extensive coverage and top-notch customer service they provide.Truly recomend it.
4.3 March 28, 2023
Worth Buying
PolicyBazaar worked closely with me to tailor the coverage to meet the specific needs of my business.Worth buying.
3.8 March 16, 2023
Wide Coverage
One of the most significant aspects of this insurance is its coverage. It provides extensive protection against a wide range of liabilities, including bodily injury, property damage, etc. Thanks for the policy PB
3.8 March 04, 2023
Peace Of Mind
I have been a satisfied customer of PolicyBazaar for several years now. It offers a comprehensive and reliable safety that has given me peace of mind and allowed me to focus on growing my business without constant worry about unforeseen events.Thankyou PB.
3.8 February 20, 2023
Claim Process Is Hassle Free
PolicyBazaar's claims process is efficient and hassle-free. In the unfortunate event of a claim, they handled everything swiftly and professionally, ensuring a smooth resolution without unnecessary delays. This reliability and promptness have further strengthened my trust in their services.Thankyou.
4 February 20, 2023
Great Customer Support
PolicyBazaar can help you get your Insurance as I am in the construction Industry and needed some guidance on risk concerns. I contacted PolicyBazaar Team, whO explaned to me the process to get the Insurance. Thank you PolicyBazaar.
3.8 February 16, 2023
Damages Covered
I recently purchased CGL insurnace from PolicyBazaar. They helped me to cover my damages. Thankyou.
4 February 12, 2023
Helpful Team
We were looking to buy Comprehensive General Liability Insurance Plan that protects Third party property from any accidental damage at my workplace. So we landed on the PolicyBazaar website. It was well managed and described all the benfits in detaill... We contacted their Customer support and dcided to buy from them. Thanks, PolicyBazaar Team
3.8 February 08, 2023
All In One Platform
It is an All in one platform which provided me unique perks, Low premium prices and a fast claim settlement process. Thankyou PB. Excellent platform.
4.3 February 04, 2023
Good Package
Got a really good coverage. Thanks, PolicyBazaar