Public liability insurance is an important and often compulsory product for all businesses, whether you are a new entrepreneur or a multinational conglomerate. If an individual is hurt or incurs property damage as a result of negligence, the business responsible can be held liable for compensating the claimant. From extensive legal fees to hospital treatment, a single incident can jeopardise the financial health and solvency of your business.
How Public Liability Insurance Works
Public liability insurance is engineered to protect your business from such an occurrence. It covers the cost of all legal fees as well as any compensation awarded to the claimant. Furthermore, if the NHS seeks entitlement for any hospital bills, the insurance company will be responsible for defraying the cost.
What Public Liability Insurance Covers
Both injuries and damage to personal property will be covered under the terms of your public liability insurance policy. This is true whether the injury is caused by you or employee, and regardless of whether it occurs at your office or in a client’s home.
A typical policy will generally cover the cost of the damage, the price of legal representation, and any other fees and expenses incurred whilst defending your claim. In summary, most policies will protect your business against the following:
- Entitlements for damages and injury
- Claims made by the NHS for medical treatment
- Legal costs and expenses
- Covers damages made by you, an employee, or while on your premises
Limitations and Exclusions
Public liability coverage is designed to protect your business in the event of injury or property damage to a third party. It does not protect you from an injury to an employee. For that, employers liability insurance is required.
Furthermore, many insurance policies do not provide coverage if reasonable steps are not made to prevent an injury due to negligence. For example, if a contractor deliberately builds a faulty deck by using inferior tools and equipment, an insurance company may refuse to provide coverage.
Types of Public Liability Insurance Claims
Public liability insurance claims happen to individuals from a variety of professions. The following are some examples of typical claims to give you an idea of how public liability coverage works:
IT Jobs – A computer engineer working on a customer site may accidentally knock over a cup of coffee down the back of a server. This will not only damage the expensive hardware beyond repair, but knock down the entire network until the server is replaced. As a result, the engineer is now liable to pay an enormous cost to the customer, which without insurance will irreparably harm his business and personal finances.
Restaurant and Store Owners – Any building that has regular traffic increases the likelihood for slips and falls. Whether it is a loose piece of carpeting or a slippery tile, failing to properly warn a customer with a sign before an accident can mean the business was negligent with regard to safety.
Contractors – Anyone who performs work at a client’s home can cause injury or damage to property. Whether it is a spilled drink, a poorly repaired step, or a badly wired fuse box, there are no shortage of accidents that can occur while you or your employees are visiting a client.
Amount of Cover Required
The amount of cover you require is contingent on the type of business you own. Risks vary from company to company, and the premiums are fashioned according to those risks. A small business will likely take cover anywhere between £1 million and £5 million.
However, some may take out larger cover to provide peace of mind for the business and the client. A public liability plan shows the client that should an accident happen, they will be compensated for the error. Public liability costs are typically low, and can be packaged with other insurance to mitigate costs.