Question

Which of the following statements is TRUE?

Occurrence-based liability insurance exposes the insurer to long-tail claims.

In commercial liability policies, umbrella policies provide primary coverage, while general liability insurance provides excess coverage.

Inland marine insurance provides coverage mainly for transport on inland waterways.

Under the doctrine of contributory negligence, a plaintiff is compensated after taking into account his/her responsibility in a loss claim.

Answer 1

Statement 1: "Occurrence-based liability insurance exposes the insurer to long-tail claims."

• This is a False statement.
• long-tail claims refers to the claim having long term settlement period. It is a provision stated in the policy that extends the quantum of time available to make a claim after policy's maturity.
• Whereas occurence based liability insurance covers losses that has taken place during the specified insurance coverage period.

Statement 2: "In commercial liability policies, umbrella policies provide primary coverage, while general liability insurance provides excess coverage."

• This is a False statement.
• General liability insurance provides to cover loss on damages on account of bodily or personal injury, advertising injury, property damage and non-professional careless acts, while excess liability insurance provides excess coverage.
• Umbrella policies are to be chosen to cover claim that has not been included in primary policy. It is a type of extra liability designed to provide protection from losses that are not covered by existing policies.

Statement 3: "Inland marine insurance provides coverage mainly for transport on inland waterways."

• This is a False statement.
• Inland marine insurance helps covers Products, materials and personal belonging equipments while been transported (not necessarily/ mainly for transport on inland waterways)
• Property that is insured under marine insurance coverage includes the following:

a) In-transit property.

b) property at fixed location, been an instrument of transportation.

c) property held by baillee.

d) goods that is movable in nature, often in different locations.

Statement 4: "Under the doctrine of contributory negligence, a plaintiff is compensated after taking into account his/her responsibility in a loss claim."

• This is a True Statement.
• Contributory negligence refers to the failure of taking proper reasonal action by plaintiff for the safety.
• After awarding the damage and determining the loss or fault, the court proceeds such reduced amount to be payable by defendant to the plaintiff.

Conclusion: Therefore the correct statement is Under the Doctrine of Contributory negligence, plaintiff is compensated after taking into account its responsibility towards a loss claim.

True statement is option D: