Why is Public & Products Liability Insurance Important for Business Owners?
Public & Products Liability insurance is almost always sold together and you will often hear it referred to as “Broadform Liability”.
Such a policy is vitally important for every business as it protects the policyholder from legal liabilities arising from claims of personal injury or property damage, as detailed below.
Public Liability covers the legal liability of the policyholder for claims arising from personal injury or property damage, arising during the period of insurance in connection with the business activities.
Simply put – if injury is caused to another person or property of a third party is damaged, due to your negligence in carrying out your business activities, the policy will respond to claims against you. Subject to all applicable policy terms, conditions & exclusions.
Public Liability is part of the law of tort which focuses on civil wrongs. Claims are made under common law based on negligence and/or damages. Claims are usually successful when it can be demonstrated that the business breached a duty of care and caused the injury or damage when carrying out their business activities.
An example of a public liability claim is a shopper in a supermarket who slips on a spill on the floor and injures their ankle. If the shopper sues the supermarket and demonstrates that they breached their duty of care, the shopper will likely we awarded damages to cover medical costs, loss of earnings, etc.
Other Public Liability claims examples may be a customer tripping over contents in your office, a security guard causing injury to a bar patron during an eviction, a painter over spraying a wall and damaging a car with the paint, a tradesman causing damage at a client’s home… you get the picture.
Products Liability covers the legal liability of the policyholder for claims arising from personal injury or property damage, arising during the period of insurance in connection with the products of the business.
In other words, the product causes injury or property damage.
A great example of a products liability claim is the Liebeck v McDonald’s case of 1994. It is undoubtedly one of the most unbelievable product liability cases in US history. In this case, Stella Liebeck accidentally poured hot coffee, purched from McDonald’s, on her lower body and suffered third degree burns on her thighs, groin and buttocks. Liebeck’s lawyers argued that the company served coffee at a temperature of 180 to 190 degrees Fahrenheit while other companies served coffee at a more reasonable 140 degrees. Liebeck was awarded a jury verdict of $2.7 million in punitive damages and $160,000 for medical expenses.
Other Products Liability claims examples may include a restaurant causing food poisoning to diners, a child’s toy causing harm to an infant, a faulty electrical appliance, etc.
The premium payable for Public & Products Liability insurance is dependent on several factors, including: the activities of the business; the limit of indemnity requested; the size of the business (annual turnover, number of employees, etc.); the claims history and the like.
As with all insurance policies, terms, conditions & exclusions will apply.
To learn more about Public & Products Liability insurance and why it is important for your business, please contact Ausure Insurance Brokers Macarthur