Generally, the law in all countries intends that a person who causes injury or damage to another party should compensate the other party for that loss. The compensation will be in the same proportion as his/her liability. The burden of liability and the means and standard of proof necessary to establish it, will vary from country to country and from one particular subject-matter to another within the same legal system.

Liability arises from a civil wrong or breach of personal duty imposed by law on a person and owed to his/her fellow citizens. In some countries, legal rights and duties are framed in a Civil Code. In others they are not codified but drawn from the precedent of decisions handed down in the courts over the centuries, this is known as “Common Law”.

Civil Law is concerned with Regulating the conduct of people towards one another, and providing a mechanism where one party may be required to provide compensation to another who suffered harm as a result of their failure to behave in accordance with acceptable standards.

Insurance policies are concerned with breaches of Civil Law, i.e. with civil liability and the two main sources are

1. Common Law    
   - Often referred to as Judge-made law
   - Based on customs and traditions
   - Developed by Judges through precedent

2. Statute
   - Written law
   - Sets down what should and should not be done
   - Usually introduced by Acts of Parliament
   - By amending common law or replace it with new

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