Commercial vs Public Liability Insurance: What You Need To Know

A lot of blood, sweat and tears go into the successful running of a business. Many business owners will agree that companies require a lot of time, energy, and even financial investments too. 

And if anything were to go wrong, you’d want to ensure that all your hard work doesn’t end up going down the drain. 

It’s particularly necessary for smaller businesses who, without financial assistance in the event of an incident, could run the risk of going out of business. That’s why it’s crucial to invest in some type of business insurance in South Africa. 

What Is Commercial Insurance? 

By definition, commercial insurance is an umbrella term for insurance services or products aimed at commercial businesses. It provides coverage for businesses against potential losses that may arise through unforeseen circumstances. 

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The details of each policy will vary depending on the business or level of coverage. However, some things that can be covered under commercial insurance include:

  • Damage to property
  • Theft 
  • Liability 
  • Injuries sustained by customers, employees or business owner(s)
  • Commercial auto insurance
  • Unexpected events or interruption of business

Essentially, commercial insurance helps to absorb the costs of any costly impairment that could ruin a business by compensating them financially. 

What Is Public Liability Insurance?

Public liability insurance is one of the most common types of insurance when it comes to smaller businesses and those who are self-employed. While it may not be a legal requirement, it’s a good option for any business that interacts with members of the general public in any capacity.

An unrelated third party, such as a customer or client, may claim to have been caused financial damage by your business. They would then go on to make a liability claim for financial compensation. Public liability insurance would help cover the necessary costs related to such a claim. 

The main feature of public liability insurance is covering any damage to property or injuries sustained by members of the public whilst interacting with your business. 

  • Damage to property – for example, a customer could enter your business premises and a faulty piece of equipment could damage their personal belongings. In this case, public liability insurance would help cover the costs of repairing or replacing the item. 
  • Physical injury – if a customer were to enter your premises and, for example, slip and fall on a wet floor, public liability insurance would help cover the costs of their treatment or recovery.  
  • Legal expenses – if, for whatever reason, someone were to file a lawsuit against your business, public liability insurance would help cover the legal expenses. This would include hiring and paying an attorney to represent your business in court or offer to settle with the plaintiff. 

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What Kind Of Insurance Is Best For Your Business? 

All businesses have unique needs and require more coverage than what’s offered by even the best personal insurance companies. Businesses have more at risk, such as property, finances, stakeholders and employees, as well as reputation. 

It’s important to be aware of the differences between commercial insurance and public liability insurance. This will aid you in deciding which type and which policy works best for you and your business. 

With both commercial insurance and public liability insurance cover, businesses are covered in the event of physical injury, loss or damage to property. 

Public liability insurance covers incidents that occur on your business property, such as when it comes into contact with the general public. This can include theft, personal injury, loss of or damage to property, and death. 

Commercial insurance comes in different forms with different ranges of cover. Its primary purpose is to protect businesses against financial loss, such as those caused by theft or injuries sustained by employees. 

Essentially, commercial insurance covers a business, its owners and employees from any internal or external impairments that occur within the scope of the business itself. Public liability insurance covers a business’ compensations made to the general public. This is based on the said business’ or its employees’ negligence.

Commercial insurance is, therefore, a considerable option for most businesses, whereas public liability insurance is worthwhile for businesses who frequently interact with the general public. 

3 Factors That Affect Your Policy Cost

When it comes to insuring your business, the process of determining the cost isn’t simple. So much so that many companies opt to employ the use of sophisticated software systems to help determine what the cost should be.

There are several factors that may come into play and influence the amount that you pay for your insurance policy. Some are beyond your control, and others are not. They include:

1. Business territory – where you do business can affect the amount you pay for your insurance. This could be dependent on suburb, city, or country – each has unique characteristics that may make it less or more expensive. 

2. Type of business – some businesses are considered more high-risk than others, and therefore will pay an amount specific to their individual risk profile. An electronics repair company won’t be as high-risk as, for example, a construction company.

3. Business activity – the more business you engage in, the more likely it becomes that you will experience a claim. So your premium may differ from one year to the next depending on the growth of your business.

Conclusion

Selecting the right insurance policy for your business is the key to protecting your company, and all the hard work that goes into building and maintaining it. 

Finding yourself underinsured in a sticky situation could be a potential financial disaster. So making an informed decision on the kind of cover you need for your business will ensure you’ll always have some assistance when in a tight spot. 

Knowing that there is an insurance company to help protect you in the event of an incident will give you peace of mind when moving forward in your business ventures. 

 

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