What are the main types of liability insurance?
Most business insurance policies will contain three different types of liability cover. These are employers, product and public liability insurance.
Public liability can also be considered as third party liability. It is the cover that protects a business from a claim by a member of public or other third party. Claims can be for damage to property or personal injury.
The one group of persons that are excluded from claiming under public liability are employees of the business insured. This is because employees are more correctly insured under employers liability insurance. Any other person(s), business, charity or organisation can claims against another’s public liability insurance.
What is a valid claim?
It is important to note that negligence needs to be proven for most liability claims to be met. What this means is that your business has to be at fault, for causing the injury or damage. It’s usually immaterial if it’s an act that could be prevented, a claim would still be made, if caused by your business activities.
As well as claims where there is provable negligence, there are claims which can be disputed. These are the sort of scenarios where someone alleges you’ve injured them or damaged property. Just because there is an allegation, it doesn’t mean you are liable. The good thing is that most liability insurance policies will defend you against false, as well as genuine claims. Using a business insurance broker, with their own claims department can also help.
Public liability insurance – where does it apply?
If you have a packaged insurance product, such as shop, office or restaurant, it should include public liability. The most likely source of claims are for injuries at the business address. Usually these will be for slips, trips and falls causing injury to members of the public. If the business activities involve you working away from the business address, you do need to ensure your public liability insurance is suitably extended.
It would be expected that a shop keeper may travel to and from a supplier or undertake deliveries. For this reason, the public liability cover would extend to cover these activities. For example, if they caused damage at third party business, whilst delivering.
But, if the shop undertakes additional activities, particularly those involving manual work, you need to check your cover.
For example, a home furnishing shop could undertake deliveries and this would be covered. If they decided to extend their business activities to include measuring and fitting of curtains and blinds, their cover may not currently apply. An extension is easily obtained, through a conversation with their insurance broker. The reason cover needs to be extended, is that fitting curtains increases the potential of a public liability claim. It’s important to extend your policy to include this cover. Also, you’ll need to check the third party property damage excess. For example, your liability insurer may be happy to extend cover. As well as charging a small premium, your excess increases from £100 to £750. If this happens, it may be time to look for a different business insurance quote. If the terms applied are onerous and out of step with the marker, you could cancel your business insurance early. It is vital that you check your policy wording to see if there are any early cancellation terms applying. However, most insurers would be amenable to cancelling early, if their terms are unfavourable.
Public liability insurance – geographical limits
Most policies contain territorial limits. This is where the insurer agrees to extend cover, but for certain areas only. If your business is likely to undertake work overseas, then you need to discuss with your business insurance broker. There are usually four set territorial limits. UK, EU, USA and Canada and the Rest of the World.
Work in the USA or Canada needs to be considered carefully. Liability insurance claims in the USA and Canada can be much more costly than claims in the UK. Not every insurer is happy to cover work in these territories. It is always worth having a telephone conversation with your broker to ensure you have the right cover.