Understanding Public Liability Insurance
As a business owner, you do everything within your power to make sure that no-one is injured, or property damaged when you’re working or during a visit to your office or factory. However, sometimes the unthinkable happens and someone is injured, or building, plant and equipment becomes damaged. As a result of the injury, this person cannot work and loses income, or worse, may be permanently injured. It’s at this point that you or your business may become legally responsible.
Without the right type of insurance your company can take a significant financial hit, as well as a blow to your reputation, and may even put you out of business. That’s where Public Liability Insurance comes into the picture because it protects you and your business against the substantial legal costs to engage lawyers to help you defend and pay any damages you are liable for.
What does Public Liability Insurance cover?
As a business owner, you already know that you have a responsibility for people that visit your premises, or when you go out to clients’ homes or businesses. Accidents, however, can happen, which is why you need to protect your business with Public Liability Insurance.
This type of insurance provides the following types of cover, which should also be tailored to your business’ specific needs.
- Payment of damage to the property of a third party or loss of proven business income. A third party is any customer, visitor or anyone you deal with for business, except employees;
- Legal costs associated with having a lawyer assist you and defending the claim, if necessary;
- Costs to employ specialists and consultants to help in your defence of the allegations;
- Damages agreed as payable by your insurer to the third party, if they have found you responsible;
- Damages ordered by the court; also
- Payment of the third party’s legal costs and expenses, if your found responsible for the Injury, death or property damage.
Some factors you need to think about when deciding on the amount of Public Liability coverage that’s required by your business will include: the type of business; how many people you have any your premises; any requirement from a council, client of landlord. For example, a diving company might require higher coverage and pay more premiums than a dog walking business.
What does it not cover?
It’s important to understand that Public Liability Insurance isn’t the only insurance required by your business. For example, it doesn’t cover your business for injuries to your employees, which is covered by Worker’s Compensation Insurance. Insurers are also usually not allowed to pay any penalties or punitive damages on your behalf.
In addition, if your products are recalled for whatever reason, Public Liability Insurance doesn’t cover you for the financial or reputational losses due to this event. This would be insured by a Product Recall Insurance. Lastly, issues involving asbestos, aircraft or motor vehicles are not covered under this policy, as there are specific insurance policies for these items.
Do you really need Public Liability Insurance?
Whilst slips, trips and falls are only one type of allegation that can be claimed against your business, it’s good to know the numbers have been on the decrease since 2016. However, that’s no reason to become complacent because the financial and reputational costs to fight these allegations in a court of law can be significant, and the average cost of each claim has been increasing.
This means that you can take all the care in the world and rarely ever be faced with these types of allegations, but it can only take one claim to ruin your company financially and reputationally. So if your company interacts with suppliers, customers or the public in any way, then you can benefit from some level of Public Liability Insurance. To decide what type of insurance policies are suitable for your business, talk to a professional insurance adviser today.
This article originally appeared on Insurance Advisernet Website and has been published here with permission.