An insurance policy provides cover for the “Insured”. Depending on the type of policy, the Insured is covered for their own loss or for the Insured’s liability to a third party for that third party’s loss.

First party insurance responds to the Insured’s own loss and usually covers the Insured’s person or property. Examples include home and contents insurance, life insurance, motor vehicle cover (certain parts) and travel insurance.

Third party insurance covers the Insured against the Insured’s liability to a third party for loss suffered by that third party. The type of liabilities that are covered will depend on the insurance and the policy terms. Commonly, third party insurance may cover claims for personal injury, property damage, lawsuits or other actions for recovery brought against an Insured. Examples include Directors and Officers Liability Insurance, Professional Indemnity Insurance and third party motor vehicle insurance.

Some policies include cover for both first and third parties – for example, some home and contents insurance policies not only cover the home owner for damage to the home but also for damage suffered by third parties (for example a visitor to the home).

Common types of business insurance

Knowing what policies your organisation holds and the nature of the cover provided by them is essential to ensuring your business is adequately protected against the risks the business might face. Brokers generally advise on the types of cover that might be required and the extent of that cover. Solicitors, however, play a key role in advising on policy wordings and (in some cases) negotiating the policy terms with the insurer.

Common types of insurance businesses hold include the following:

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