LIABILITY INSURANCE

Liability insurance provides indemnity against claims made by third parties for bodily injury or property damage and in the case of professional indemnity and directors’ and officers’ liability insurance for economic or pure financial loss for which the insured may be held legally liable.

Main Types of Liability Policies and Scope of Coverage:

Difference Between Workmen’s Compensation and Employer’s Liability

In Malaysia workmen’s compensations insurance for foreign workers is compulsory under section 24(2) of the Workmen’s Compensation Act 1952(WCA)(amended August 1996) while the Employee’s Social Security Act 1969(ESSA) enforces compulsory contributions to the Social Security Organization (SOCSO) by both employer and employee.

Malaysia workers (earning below RM3,000 a month) are no longer subject to the WCA from 1 July 1992 but they (both the employer and employee) are required to contribute to SOCSO which administers the ESSA.

Section 42 of the ESSA prohibits an employee who receives compensation from SOCSO to receive ‘ any other benefit under any other written laws’. This means that an employee I prohibited from taking his employer to court for additional compensation (more than that provided by SOCSO) even if he can prove negligence of the employer.

Scope of Cover:

Employer’s Liability

Provides indemnity to the employer for damages and defense costs in respect of employer’s liability to employees injured in the course of their employment.

Workmen’s Compensation Insurance

Provides payment of compensation to workmen (as per the scale of compensation under the Workmen’s Compensation Act 1952) for injury in the course of their employment.

Foreign Workers Compensation Scheme

Provides payment of compensation to foreign workers for injury sustained in the course of their employment including repairing expenses and 24 hours Personal Accident coverage (issued by a Panel of authorised insurers).

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