1.

Explain the scope of cover provided under a standard public liability policy, including:
operative clause and other clauses, exclusions, conditions, extensions, policy limits and
legal costs. [20 marks]
2. Identify and discuss five common public liability policy exclusions. [20 marks]
3. Discuss the key underwriting factors for public liability insurance. [20 marks]
4. The employees at Hardcore (Pvt) Ltd while digging a trench negligently cut the power
cables supplying electricity to Mr Brown’s factory nearby. As a result of this incident, Mr
Brown’s factory has to be closed pending the restoration of power. Mr Brown sues
Hardcore (Pvt) Ltd for the following losses he claims to have suffered as a result of the
power cut:
(i) Damage to machinery as a result of the sudden power cut.
(ii) The cost of the products which were being worked on but could not be finished
because of the power loss.
(iii) Loss of production which led to some orders being cancelled.
(iv) One of Mr Brown’s clients had a monthly order for 12 months which he has since
cancelled because on the day of the power cut, no supplies could be sent to him.

If Hardcore (Pvt) Ltd have a public liability policy, which of the above claims are likely to be
indemnified for? Give reasons in support of your answer in each case. [20 Marks]

5. Fix-it (Pvt) Ltd is a medium sized engineering company operating in the industrial area of
Bulawayo. The company has a public liability policy with a leading insurer in Zimbabwe.
Over the course of the insurance period the company incurs the following claims:
(i) Jabu, one of the technicians at the company is injured while operating one of the
machines at the company’s premises. He subsequently dies from his injuries. The
accident is attributed to poor maintenance of the machinery by the company.
Jabu’s wife sues Fix-it (Pvt) ltd for loss of support. [5 marks]
(ii) Fix-it (Pvt) Ltd has a contract to supply rubber boots to the Bulawayo City
Council. Due to wrong specifications by Fix-it, the boots turn out to be defective.
The Council claims damages for breach of contract. [5 marks]
(iii) The Managing Director of Fix-it writes a letter to the management of a rival
company accusing them of being corrupt and devious in their business dealings
and of “stealing” customers from Fix-it. The rival company sues Fix-it for
damages alleging that there was an unjustified attack on their reputation. [5
marks]
Giving reasons in each case, to what extent if at all is Fix-it likely to be indemnified by their
insurers for the above claims under their Public liability policy?

6. Pachedu Contractors (Pvt) Limited have been contracted by the Posts and
Telecommunications Corporation (PTC) to dig a trench in the eastern suburbs of Harare
for the laying of underground cables as part of the PTC’s digitalization project. One day
as employees of Pachedu Contractors are digging the trench, they negligently cut the
underground cables supplying electricity to that part of town. As a result two residential
suburbs are affected and it takes eighteen hours for power to be restored in the area.
Pachedu Contractors have a public liability policy for $350m with a leading insurer in
Harare. You are asked to express an opinion on the following claims including how
Pachedu Contractors’ public liability policy will respond to the claims:
(i) The electricity company want compensation from Pachedu for damage to the
underground cables [5 marks]
(ii) Three hundred residents of the affected suburbs want compensation for damage to
their electrical gadgets and condemned food resulting from the loss of power.
More residents are expected to lodge similar claims. [5 marks]
(iii) John a resident of one of the affected suburbs steps on a live electric cable left
exposed by employees of Pachedu. John is electrocuted and dies. His wife claims
damages for loss of support. [5 marks]
(iv) A musical show that was scheduled for the area is cancelled and the organizers
want compensation for the revenue they would have made had the show taken
place as planned. [5 marks]
[Total: 20 marks]
7. Employees of the municipality are trimming tree branches on the yard of one of the
residents of the city. Due to the failure of the employees to follow safety procedure, a
branch falls on the wall to a n adjoining property owned by John causing extensive
damage to the wall. The falling branch misses John’s wife who was seated on the veranda
by a few centimetres. John, who was reading a newspaper at the time, was not so lucky.
His right leg took the full impact of the falling branch such that it literally broke into two.
John is hospitalized for a month and the leg takes a total of two months to heal. John is
employed as a heavy truck driver by a local haulage company and thus cannot work for a
full two months. His wife was so shocked to see the injury he suffered given that it
happened right before her eyes and as result she suffered a nervous breakdown and had to
be hospitalized for a week. She also had to undergo psychiatric counselling. John is a
keen soccer lover and plays for a local amateur club which has ambitions of playing in the
premier league. John is one of the club’s star players. However, doctors advise John that
following his horrific injury, he will not be able to play his favourite sport again.
Naturally John is devastated by the news as heal so relied on soccer to supplement his
income.

John and his wife approach you for advice on the types of damages they can claim from
the municipality. Advise John and his wife on the specific types of damages they can
claim and the basis on which those damages can be claimed. [15 marks]