Inpol Insurance Broker, JSC is a Czech corporation providing insurance services in the area of industrial and business risks.

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Liability insurance

Liability for damages including manufacturer's product liability

One of the basic types of insurance defined directly by the Civil Code is liability insurance for damages (as stipulated by Section 822 et seq. of the Civil Code). The client arranges for this type of insurance for the eventuality that he/she will be responsible for damages and will be obligated to compensate for them. In principle, liability for damages may occur in two cases: firstly, in the event of the violation of legal responsibilities and secondly, in the event that a legally significant incident arises. The legal regulations specify in detail the situations in which legal incidents are joined with liability for damages.

The financial stability of a company may in fact be significantly affected in the event that the company's activities cause damage to another party for which the company is then liable and is therefore required to compensate. A company may transfer the majority of this risk to an insurance company by means of liability insurance. The insurance company then assumes the insured party's obligations to compensate the damaged party; the amount of compensation may fluctuate from less than a hundred crowns to several million. Higher amounts are typical for damage to health or in the event that a company is liable for another's lost profits. Additionally, companies which export their products carry a higher liability - a so-called manufacturer's product liability.

The basic principle which is included in the Civil Code in the section regarding liability for damages is the generally stipulated responsibility to use such precautions so that damage to health, property, the ecology and the living environment does not occur. It is necessary to stress the fact that insurance does not apply to damage that is caused intentionally. This liability threatens all subjects but it is possible to decrease this risk significantly, and even to rule it out completely, with the appropriate preventive measures. This is partially due to the fact that the damaging party may absolve himself/herself of this liability if he/she proves that they did not engineer the damage.

Furthermore, in the reasoning of the Commercial Code, everyone is responsible for damage which he/she causes to another party by his/her activities. A very wide scope of liability is involved, which endangers to the greatest degree those subjects who perform manufacturing activities. Again it is possible to greatly decrease the amount of this liability by abiding by technical standards, procedures, etc.

Other possible sources of liability for damages arise from:

  • Liability for damage to items which are taken over and items which are utilized
  • Liability for damage to fetched or stored items

The Labor Code addresses the questions of liability for damages which an employee incurs during the performance of his employment duties or in direct relationship to them. We are speaking of liability for damages stemming from a work accident or occupational illness. These risks are, however, included in the legally required liability insurance for damages arising from work accidents and occupational illnesses. The employer's liability for damages due to the violation of legal obligations and the employer's liability to the employee for damage that occurs to items laid aside are also included.

Liability for damages is judged according to the Commercial Code in the event that the damages are caused by violations of responsibilities which come from an obligation which is also regulated by the Commercial Code, or the violation of responsibilities which are defined by the Commercial Code.

A very important liability is the so-called manufacturer's product liability. Manufacturer's product liability is regulated for members of the European community by the Directive of the EEC dated July 25, 1985. These guidelines set the foundations for the origination of manufacturer's product liability, including exonerative circumstances. The manufacturer is responsible for any defects in his products.

The purpose of liability insurance is therefore to free you from the claims for compensation of damages which may be brought against you. This means that the insurance company will negotiate for you with the damaged party in the event that these claims are valid and will refuse any unfounded claims. If court procedures become necessary, the insurance company will litigate on your behalf and will pay for any possible expenses arising from the court procedure.

Important Certificates

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