Some commentators have sought to draw a distinction between property and liability insurance in relation to the nature of the insurer’s obligation. This short article seeks to show that the nature of the obligation is common to both kinds of insurance. In short, that it is an obligation to save the insured harmless, to full or partial extent as is agreed in the contract, in the event of the occurrence of an insured peril. In neither property nor in liability insurance does the insurer promise that he will prevent the insured peril occurring. Furthermore, the insurer does not necessarily promise that he will prevent a loss occurring to the insured.

Too much may be made of the supposed distinction between property and liability insurance. Indeed it would be surprising if different principles were to apply to these forms of insurance or for the law to classify them as different in nature. One argument, however, sees property insurance as taking the form of indemnity for loss suffered, that is as a promise to compensate in the event of an insured loss occurring. By contrast, the same argument seeks to categorize the nature of the insurer’s obligation in a liability insurance policy as a promise to prevent loss being suffered.1 In either event the necessary logical conclusion is that the insurer first becomes liable under the contract, in terms of such promised indemnity as soon as an insured loss is suffered. In truth any supposed distinction is more apparent than real and the debate is apt to degenerate into an issue of semantics. Clearly, the insured peril gives rise to the “loss” but is not synonymous with it. Thereafter much depends upon how one chooses to define or describe the “loss” in question. What seems agreed by all is that in neither type of insurance does the insurer promise that no insured peril will take place. Any promise to that effect would be worthless.