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Difficulty: MediumInsurance: Principles and Types

Match each commercial insurance policy type on the left with its corresponding coverage description on the right.

  • Fidelity Guarantee InsuranceProtects a business against financial loss arising from dishonesty, embezzlement, or fraud by employees.
  • Consequential Loss InsuranceCompensates a firm for lost business profits and ongoing standing charges resulting from property damage.
  • Employer's Liability InsuranceCovers legal liabilities to pay compensation for work-related injury or illness suffered by staff.
  • Public Liability InsuranceIndemnifies a business against legal liability for accidental injury or property damage caused to members of the public.

Answer

Fidelity Guarantee Insurance matches protection against employee fraud; Consequential Loss Insurance matches compensation for lost business profits during business disruption; Employer's Liability Insurance matches coverage for staff workplace injury liabilities; and Public Liability Insurance matches indemnification against accidental third-party injury or damage.
Each commercial insurance policy aligns with a distinct operational risk: Fidelity Guarantee covers internal dishonesty, Consequential Loss protects business earnings post-disruption, Employer's Liability covers workplace injuries to staff, and Public Liability covers accidental damage or injury to third parties.

Step-by-Step Solution

1
Identify the primary risk protected under internal staff dishonesty policies.
Fidelity Guarantee Insurance protects employers against fraud or embezzlement by staff.
Businesses face financial risks when employees handle cash or manage inventory.
2
Determine the policy addressing indirect economic losses following physical damage.
Consequential Loss Insurance covers lost profits and fixed standing charges during operational interruption.
Standard fire policies cover direct damage to buildings, while consequential loss covers lost income.
3
Distinguish between employee liability and third-party public liability.
Employer's Liability applies exclusively to workplace injury of employees, whereas Public Liability covers third-party visitors and members of the public.
The legal obligations owed to employees differ from liabilities owed to external visitors.

Key Concept

Classification and scope of commercial risk insurance policies.
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Topics

Insurance: Principles and Types

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