Why is business liability insurance important?
UK-based businesses need to have public liability insurance to cover risks for damage and personal injury. However, did you know that the term business liability insurance could also refer to insurance for product liability, professional indemnity insurance or employer’s liability? In this free guide, we reveal what you need to know about these types of insurance policy and what you should do to ensure proper protection against business interruption and legal expenses. Check these expert tips and advice today as we help you to reduce unnecessary risk, avoid problems and make sure your company has the insurance it needs.
What is public liability insurance?
Public liability insurance usually refers to property owner’s cover that compensates victims if injuries caused on the premises are due to the negligence of a third party. However, the term business insurance sometimes also refers to professional indemnity insurance, especially in the case of self-employed professionals. Additionally, for manufacturers, it could mean insurance for liabilities which could arise from defective products.
Different types of business insurance
Public liability insurance is essential to cover legal defence fees, compensation and other associated expenses if a visiting client, customer or staff member is subject to injury while on the company premises. Optional extras are usually available, including property damage, a legal helpline and extended representation in court during public liability claim hearings.
In contrast, different from public liability insurance, employer’s liability cover protects the company if employees sustain injuries or become ill during their work and go on to claim compensation. This legal requirement applies to almost all employers; a current certificate must be on display where staff can see it. However, small limited companies with a single employee director (consultancies, for instance) are usually exempt.
Typically, employer liability insurance policies cover all types of employee: full time, part time and temporary staff. Maximum claim amounts vary between £1 million and £10 million, depending on the insurer and policy.
Conversely, another type of business insurance is for product liability. Unfortunately, goods can and do go wrong, causing damage. Therefore, a manufacturing business needs to protect itself against customer or client claims and associated legal costs.
Product liability insurance covers lawsuits for defects such as:
- Baby cots, cribs and high chairs.
- DIY tools.
- Fitness watches.
- Heaters.
- Kitchen appliances: kettles and white goods
- Laptop battery packs.
- LED lights.
- Personal grooming appliances.
- Power adapters.
- Toys, hover boards and scooters.
Which businesses need public liability cover?
All employers and businesses that serve the public are subject to Health and Safety regulations, government legislation and council by-laws. Whether the property is a workshop, large office, shop, store, customer entertainment venue, or any other space that is open to the public, the law requires adequate general liability insurance.
Public liability insurance cover protects your business
Problems and mishaps that might lead to a public liability claim or a personal injury claim from a client include:
- Asbestos exposure.
- Accidents in lifts due to sudden stops or drops
- Escalator accidents such as whiplash.
- Broken stairs and steps.
- Chemical burns due to the inhalation of or skin contact with hazardous materials, powerful cleaning agents etc.
- Paths with uneven paving, potholes or tree stumps.
- Slip hazards: leaves, ice or snow on pavements and pathways.
Business insurance for special events
If you are organising an outdoor event or festival, it is essential to check with your insurer or an insurance broker to ensure adequate public liability cover. Catering suppliers, for instance, might have to deal with a customer claim for burns from overheated food, or scalds from spilt or overheated beverages or washroom taps.
Whether the special occasion is a local or regional festival, an annual fair or a special opening promotion, its size and nature will influence the sum required. Typically, £5 million is not unusual; the amount might rise to £10 million for large festivals with crowds of attendees. As well as public liability insurance, organisers need to have employer liability insurance if the business employs staff at events.
Minimising risk
To minimise the possibility of a claim for public liability, well-placed signs are advisable to inform staff and visitors of hazards such as heavy weights, toxic or flammable chemicals and areas that are out of bounds. In some workplaces, protective workwear such as safety goggles, helmets, overalls and harnesses are necessary.
In the unfortunate event of an incident on business premises, the member of the public involved must report it to the relevant person or authority. In a shop, store or a supermarket, the manager is responsible. The responsible person or manager then has to record details in an official logbook and provide a copy of the entry to the injured person or the person reporting the mishap.
Finally, when assessing risk, it is prudent to plan how to rectify the situation if accidents, injuries or damage were to occur.