If you work with clients or customers, or in public spaces, you could be liable for damages arising from property or injury claims. As a business owner you are also accountable to third parties such as customers, suppliers and anyone else who may be involved with your business.
If an impacted third party suffers loss or damage, they may be able to make a claim that could result in you having to pay costly legal fees as well as the damage or injury you may have caused.
Public liability insurance is designed to protect your business against claims resulting from accidents or injuries that occur from your business activities, or accidental damage to someone else’s property that occurs while conducting your business.
Who needs public liability insurance?
The list of businesses, sole traders, contractors and professional consultants exposed to public liability claims is extensive, including everyone from accountants, lawyers and doctors to every type of tradesperson and just about everyone who runs their own business. If you want more information about your specific circumstances, it pays to talk to someone from an industry association.
Public liability insurance differs from professional indemnity and product liability. Professional indemnity generally covers legal liability for claims arising out of an actual or alleged breach of professional duty, whereas product liability relates to injury or damage caused by any products your business distributes, supplies or manufactures.
Importantly, public liability insurance only covers claims made by external parties, not those of your own employees injured on the job, which is usually covered by mandatory workers compensation insurance.
Be careful with any sub-contractors that you engage. If you exercise a degree of control over their work and provide them tools or a uniform, they may be deemed to be your employee at law. It’s important that you seek advice on this issue.
Regardless of whether it’s a contractual obligation, public liability is always a wise investment. It protects you and your business from any financial risk of negligence that causes foreseeable harm and should therefore be considered a core insurance, regardless of the size or scope of your business.
Be proactive and minimise your risk
Before deciding on the best insurance for your specific requirements, there are steps your business can take to minimise exposure to the aforementioned claims. This can include everything from accurate record keeping (in the event of a dispute regarding the time and place of an alleged incident) to regular upkeep of equipment and areas of your premises that are used by customers or clients, and ensuring your work procedures are safe when working away from your premises.
In the event that someone makes a claim, however, a good insurance policy should provide you with the back-up you need without your business being too badly affected. Such a policy should cover all the members of your staff (partners and directors as well as employees) while they are involved in company business.
You should also know what it is you want to cover and ensure your policy has taken these things into account. Public liability policies differ greatly in their scope and cost, and may include some or all of the following:
Legal costs involved in defending a claim.
Cover for third parties acting on behalf of your business.
Damage or loss of goods in your custody, or damage or loss to someone else’s property.
Costs associated with treating someone injured on your premises.
It’s also important to understand what public liability policies don’t cover, and to make alternative insurance arrangements for things such as workers compensation, gradual pollution and product recalls.
If you manufacture, supply, distribute or repair products then a combined public and products liability cover may best suit your needs.
It’s always a good idea to talk to an expert such as an insurance broker if you are in any doubt about what cover you require, as well as what policy best suits your needs. This will give you the peace of mind of knowing that all contingencies have been adequately covered.