Public liability insurance is crucial for businesses that regularly come into contact with third parties. You may come into contact with third parties in three main ways. It could either be customers on your premises, client site visitations, or ordinary members of the public.
Having public liability business insurance will cover you against claims due to your negligence by third parties. Should a third party be injured, fall sick, or have their property damaged due to your carelessness, the policy will cover the financial costs.
Keep in mind that providing a safe environment for members of the public and your employees is your responsibility as a business owner. The absence of safety precautions will make your business more susceptible to lawsuits, which may cripple your finances.
So what exactly is public liability insurance? Here is what you need to know.
What is Public Liability Insurance?
Public liability insurance is a policy that exclusively provides cover against property damage or injury claims by members of the public. These claims typically result from your negligence or outright ignorance of safety precautions.
The policy usually covers financial costs such as medical bills, legal fees, and property damage repairs or settlements.
Some examples of events subject to public liability claims include:
- A customer visiting your premises and then falling due to a wet floor (without a sign noting it)
- Causing damage to a client’s property while working there (common for merchants like plumbers and electricians)
- Construction workers damaging a third party’s vehicle while working on a public site
Although public liability insurance is a legal requirement, many clients, government councils, and professional boards will request that you have it before allowing them to work or register with them.
Public Liability Insurance for Small Business
In the absence of public liability insurance, small businesses are more at risk of financial peril in the event of a lawsuit. Hence the availability of small business insurance is vital.
Small businesses have a smaller cash flow than medium and large-sized businesses. Therefore, the financial strain caused by public liability claims may lead to significant business interruption and ultimately force you to close down.
Public Liability Insurance Claims
Although insurers typically payout public liability claims, they may reject suspicious claims. You can do a few things to strengthen your case to ensure that you are on the safe side.
Here are a few things you can do:
- Take photographs of the scene and injuries
- Collect the injured party’s medical records from the doctor
- Combines all the costs (medical bills, transport fees, rehabilitation costs, etc.)
- Ask eyewitnesses for their statements (you can get these verified by the Police)
- Ask for CCTV footage of the accident (you may need a lawyer for this)
Collecting this evidence will help substantiate your claim. Thus decreasing the likeliness of your claim rejection by your insurer.
Public Liability Exclusions
General liability insurance, unlike public liability, offers a broader scope of coverage. Public liability insurance policies have several exclusions.
Some of these exclusions may include but are not limited to claims related to:
- Employee occupational illness or injury
- Damage to property owned or rented by your business
- Intentional or deliberate harm or injury of third parties (also known as punitive damages)
- Breach of contract
- Trademark or patent infringement lawsuits
- Defective or faulty products
- Wrong price advertised
- Pollution or asbestos poisoning
General Liability Insurance for Business
Although they have similarities, public liability and general liability business insurance offer two different coverage types.
Public liability insurance covers your business against negligence claims by people outside your organisation, i.e., visitors. In comparison, general liability insurance coverage is more extensive. It offers coverage against employee injuries, visitor injuries, and defective-product claims.
If your business operates in a high-risk industry, it may be worthwhile to consider getting general liability insurance that includes public liability benefits. General liability insurance is also known as business liability insurance.
Commercial Liability Insurance
Commercial liability insurance is a subset of general liability insurance. The policy provides coverage against property damage or equipment breakdowns at the business’s physical location. This is also known as property insurance.
General commercial liability insurance is also known as comprehensive cover, although it does not cover all liability claims, such as workers’ compensation and professional liability insurance.
Unlike public liability, general liability insurance offers coverage against advertising injury. These are claims made against a business whose ads are guilty of slander, copyright infringement, or theft of advertising material.
Limited Liability Insurance
Limited liability insurance is an option available for business owners who are in a partnership. While a limited liability company (LLC) separates a partner’s personal expenses from business expenses. In contrast, limited liability insurance creates a separation of liability between partners.
Unlike public liability, limited liability insurance only covers individuals and not companies. The cover protects the insured partner’s personal stake in the business from being attached to the company’s lawsuits.
The cover will pay for third parties’ illness, injury, or property damage only if the insured is at fault.
Limited liability insurance is excellent for small business owners. It covers all basic insurance needs to protect themselves from lawsuits.
Business Liability Insurance Cost
Business liability insurance coverage varies in price. Commercial liability insurance is more costly than public liability insurance due to its broader scope of coverage. Thus commercial liability is more prevalent among medium to large enterprises, while public liability is more popular with smaller businesses run by merchants, artisans, and professionals.
How Much Does a Liability Insurance Cost?
There is no set price for business liability insurance. Business insurance costs are entirely dependent on the scope of coverage.
Public liability insurance is often more affordable to small businesses, as it mainly focuses on coverage for third parties and not the company itself. With that said, it also has a lot of policy exclusions for said parties.
Commercial liability insurance covers both the insured and third parties. The policy is expansive and offers business owners “additionally insured” options. Which thus increases the monthly insurance premium.
Final Thoughts on Business Liability Insurance
Business liability insurance is fundamental for all types of businesses. Without it, enterprises risk financial loss due to employee and third party lawsuits. Business owners are encouraged to look for policies that speak directly to their needs.
Insurance is the primary way businesses can protect themselves from legal claims along with taking routine precautions to eliminate the potential risk of lawsuits