THE EFFECT OF POLICY WORDINGS ON THE VALIDITY OF PUBLIC LIABILITY POLICY

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ABSTRACT

This research has examined the effect of policy wordings on the validity of public liability insurance policy (A survey of selected insurance firms in Rivers State). The objective of this study was to investigate the effect of policy wordings on the validity of public liability insurance policy. Other specific objective to be accomplished include: To understand the meaning of wordings on liability insurance contract To ascertain the importance of wordings on public liability insurance contract To analysis the effect of policy wordings on public liability insurance contract. To identify problems of wordings on public liability insurance policy. To find solution to the problems of policy wordings on public liability insurance policy. Works of notable scholars were consulted with the intention of forming a dependable guide on the subject matter under investigation. Data were collected through carefully implemented questionnaires and administered to 70 respondents out of which 60 was retrieved and subjected to analysis using simple percentage. Based on the findings of this study the following recommendations were made that good policy drafting skill needs to be developed. This is an essential requirement in a de-tariff regime, the policy document should not become an instruments to be cited as “deficiency in service” because of omission and / or commission and imperfections in the policy wording, the prevailing judicial environment, arising out. of strong consumer movement, judicial activism and changing min-set of people (more materialistic), is always to be kept in focus, the wordings should be clear in order to avoids the implication on phrases and clauses on liability in a contract with a client.

 

 

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Goiler (2003) says wording “to a liability insurance policy is by adding the individual/organization as an additional insured to your policy, you are extending protection to them under your policy for claims which they may be brought into as a result of your negligence.

Wollner (1999) also made us to understand that not only rates are fixed, even terms, conditions and wording of policies are to be as laid down in tariff. The demise of tariff means the companies have to work out their own pricing strategy. It also means that they have to come with the appropriate policy wordings, terms and conditions.

The price of the insurance product goes with the terms and condition of the policy, apart from other factors. There may be needs to customize the products, there may also be need to conceive and develop new product as per the market need. Development of suitable policy therefore becomes more important. This in return would require skill development of people to meet this new challenge.

Insurance policies are evidence of contract porter (2007).

This is often done through a specific additional insured endorsement, naming the entity requiring such status. “Additional insured the person(s) or organization(s) shown in the schedule, but only with respect to liability for bodily injury property damage”—- caused, in whole or in part by: the insured acts or omissions; the acts or missions of those acting on your behalf. This  endorsement can be used to protect an “upstream” party like a project owner) from liability arising out of a contractor’s work, a general contractor from liability arising from sub-contractors work, or  landlord from liability arising out of a tenant’s operations, etc. Dembe (2000).

The contract may require additional insured status for “completed operations” as well as on-going operations.

The standard additional insured endorsement only provides coverage for on-going operations: insurance does not apply to “bodily injury or property damage” occurring after. Berger, (1997). All work, including materials, parts or equipment furnished in connected with such work, on the project furnished in connection with such work, on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured  at the location of the covered operations has been completed.

Thus a separate endorsement would need to be obtained for “completed operations” if contract requires such.

The parties to the contract are the insurance company and the insured. Insurance policy contracts are governed by the same rules as are applicable to contracts in general .In India we have Indian contract act of 1872 the Insurance policy should fulfill the requirement under this act . Beside, Insurance business has its own peculiarities and concerns on Account of the special nature of insurance contract which needs to be addressed. We accordingly have what are called the basic principle of insurance namely:-

Insurable interest, utmost good faith and indemnity (subrogation and contribution).Brown (1993). These are principle of common law. Incienditally these have been codified in marine insurance Act also. These principles of

insurance are basic to all insurance contract.

1.2 STATEMENT OF THE PROBLEM

We are living in the age of globalization and liberalization. This is affecting all the economic activities insurance is no exception. As far as general insurance is concerned, the globalization and liberalization has ushered in an era of de-tariff regime and entry of private insurance companies alongside the government general insurance companies. Some of the private insurance companies are joint ventures. They have thus access to the resources of their foreign partners in terms of their experience and knowledge, product range and design, services and international practices.

This means other insurance companies have to gear up to make substantial improvement in their operation and delivery system. The customer stands to gain polices who had a “sustained”, or a sustained or contracted”, wording argued that, in such circumstances, the injury was not sustained”, nor was the disease contracted “until the tumor developed (“the date of the tumor”). In contract, the insured employers, victims of mesothelioma and a solvent insurer (Zurich insurance company) (“jointly referred to as the claimants”) argued that these polices showed be interpreted so as to respond in the same way as the causation based polices i.e. at the date of causative exposure (“the date of inhalation”). Fied stein, (2008).

1.3 THE OBJECTIVE OF THE STUDY

The objective of this study is to investigate the effect and implications of policy wording on public liability insurance contract and insurance companies have to gear up, and make substantial improvement in their operation and delivery system. Other specific objectives to be accomplished include.

  1. To understand the effect of policy wordings on public liability insurance contract.
  2. To ascertain the importance of policy wordings on public liability insurance contract.
  3. To analysis the meaning of policy wordings on public liability insurance contract.
  4. To identify problems insurance is facing due to globalization and liberalization and how wording can affect in a public liability contract.
  5. To find solution to how insurance companies can escape this era of globalization and liberalization and the problems of policy wordings public liability insurance contract.
  6. To know the reason why insurance companies have to gear up to make substantial improvement in their operation and delivery system

1.4 RESEARCH QUESTION

The research on the effect of policy wordings on public liability insurance will make use of the under-listed research questions.

  1. What is policy wordings on public liability insurance
  2. What are the importances of policy wordings on public liability contract.
  3. To what extent can policy wordings lead to globalization and liberalization
  4. What are the effects of policy wordings on public liability insurance.
  5. Can there be solution to the problems of policy wordings on public liability insurance?
  6. Can there be solution to gear up insurance companies to make a substantial improvement in their operation and delivery system
  7. Does policy wordings affect during claim settlement in public liability insurance contract.

1.5 RESEARCH HYPOTHESIS

H0: There is no significant effect of policy wordings on public liability insurance contract leading to globalization and liberalization.

H1: There is a significant effect of policy wordings on public liability insurance contract leading to globalization and liberalization.

1.6 SIGNIFICANCE OF THE STUDY

The study is focused towards gaining a detail insight on the effect of policy wordings on the validity of public liability insurance contract and how policy wordings leading to the globalization and liberalization

This study will be beneficial to people in the society who have the quest for more knowledge.

It will also serve as a framework for scholars and students who are researching into similar topics. The study is also intended to provide a yardstick for underwriters, insurers, company managers in Nigeria,  how to gear up to make substantial improvement in their operation and delivery system  and anyone that may be interested on the subject matter, the effect of policy wordings on public liability insurance.

The research will serve as a good medium of information for insurance company to make sure that the policy wordings are clear, unambiguous and consistent throughout the policy especially involving grey area of the policy and they should not become an hindrance at the time of claim and must correctly, reflect the intents of the parties.

It will also help the insurer note the effect of phrases and clauses on public liability in a contract to the client typically limit the liability of the design firms to some proportion of its fee or a particular cash value.

1.7 SCOPE OF THE STUDY

The scope of research shall be limited selected insurance firms in Port Harcourt, comprising of the lead way insurance company, mutual benefit insurance company, NICON insurance, cornerstone insurance company etc. Within the area of the research.

1.8 DELIMITATION OF THE STUDY

The most limiting factor encountered in course of carrying out this research work was sourcing out of material was a bit difficult, lack of fund and time (combining classes and also research).

1.9 DEFINITION OF TERMS

CLAUSES

Clauses can be defined as a group of words that include a subject and a verb and form a sentence or part of a sentence.

CLAIM

Claim can be defined as the demanding or asking for something because you believe it is your legal right town or have it. And also from the oxford advanced learners

CONTRACT

Contract can be defined in insurance terms as the legal agreement between two parties the insured and the

CONSISTENT

The oxford advanced learners dictionary defines consistent as always having the same opinions, standards etc. Happening in the same way and continuing for a period of time.

EFFECT

Effect can be define as the result or outcome of a cause carried out during the period of insurance

GREY AREA

The word “Grey Area according to oxford advanced learned dictionary defines Grey Area as an area of a situation that is not clear or does not fit into a particular group and is therefore difficult to deal with.

IMPLCATIONS

The oxford advanced dictionary defined implication as something that is suggested indirectly stated (something that is implied all through).

INSURANCE

Insurance is an agreement between two parties (The insured and insurer), where the insured pays an adequate fee as consideration for transferring his risk to the insurer to be indemnified by the insurer upon the occurrence of the insured event.

Insurer, that the insurer indemnifies the insured at the time of loss occurrence.

INTENT

The oxford advanced learners dictionary defined intent as giving all your attention to something or showing string interest and attention on something.

LIABILITY

Can be defined as an obligation, debt or responsibility owned to a third-party and also the condition of being liable.

PHRASES

The oxford advanced learners dictionary defines phrase as a group of words which have a particular meaning when used together.

PUBLIC

According to English oxford dictionary, public can be defined as been open to general view etc.

PUBLIC LIABILITY

According to liability insurance law and practice CHUKWUDI A. OKAFOR defines public liability as a policy that will provide indemnity for loss, injury or damage to third parties arising from the activities within the premises of the insured, work away stations etc.

UNAMBIGUOUS

The oxford advanced learners dictionary defines unambiguous as clear in meaning; that can only be understood in one way

Dictionary it states that, it is the process of asking formoney from the government or a company because you have a right to do it.

WORD

Word can be defined under liability insurance as a group of word that are used in terms of constructions in policy terms and condition of a contract.

 

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