What is a Liability Insurance?
Liability Insurance is a part of the general insurance system to protect the insurer from any kind of risks of liabilities imposed by lawsuits and damages caused by it. Liability insurance is mostly a protection against third party insurance claims i.e. the payment is made not to the purchaser of the insurance, but rather to someone (an individual or a company) who has suffered some kind of loss because of the purchaser of the insurance.
Liability insurer duties can be categorized in three broad categories, such as:
- The duty to defend,
- The duty to indemnify, and
- The duty to settle a reasonably clear claim.
What is Business Insurance?
Business Insurance is to cover your business in case of an exigency or emergencies or unforeseen circumstances and there are various business insurance options available to cover your business and you can choose either one or in combination, depending on the nature, type and size of your business. Various options are:
- Public Liability Insurance
- Employer's Liability Insurance
- Professional Indemnity Insurance
- Business Premises Insurance, also called as Commercial Building Insurance
- Business Assets Insurance, also called as Business Contents Insurance.
What Insurance Does Your Business Need?
What kind of business insurance you need for your business, depending on its size and type, there are two types of insurance which you may legally be required to buy, such as:
Employers’ Liability Insurance: This insurance is required in case you have employees working for you, who are not your family members and close relatives and it covers employees from illness, death or injury, caused to them while they were working for you. Employers’ Liability Insurance also covers solicitor’s fees and it is required in case you employ:
- Permanent and temporary paid staff.
- Contracted, casual or seasonal staff.
- Labour-only contractors
- Work experience placements.
How much this insurance covers depends on various factors like turnover of your business and nature of business you run. The higher these things are, the more you will end up paying in case of any exigencies and emergencies.
In case, you do not have this insurance, you will be breaking the law and could be fined up to £2,500 for everyday you do not have the insurance.
Commercial Vehicle Insurance: This insurance is required in case you use a car or any vehicle for your business purpose. In case you are already covered with a third party motor insurance, you should include this insurance to protect against fire, theft or damage.
Apart from these two mandatory insurance covers, you can also cover other insurance options like:
Professional Indemnity Insurance: You would need to cover your business with professional indemnity insurance in case your business provides professional advice for a fee. This insurance offers financial protection and saves you from the claims made by your clients, in case they have lost their money because of your work. The amount covered by this insurance type will depend on the nature and type of your business, its annual turnover and limit of indemnity you might need. In case you are self-employed, you can still for this insurance.
Professional Indemnity Insurance covers your business for:
- Defamation and Libel
- Any kind of loss of goods or money because of your work.
- Accidental breach of copyright or confidentiality
- Loss of documents or data
- Professional negligence
You should consider covering your business with professional indemnity insurance in case your business type is of:
- Chartered Surveyors
- Financial Advisers
- Healthcare Professionals
- PR or Advertising
- Graphic Design
Commercial Property Insurance: There is no legal requirement for you to take commercial property insurance but it is advisable to opt for it for the simple reason that it provides an essential cover for your business premises and its contents.
Commercial Property Insurance price will depend on the following factors:
- Size of your business
- Number of business locations you need to insure
- How much contents, equipment and stocks you need to insure.
- What is the rebuild cost of your business premises?
In case, you own your own business premises, you can protect your building and its contents against:
- Fire, lightning, explosion and earthquake.
- Storm or flood.
- Escape of water.
- Accidental Damage
- Riots, strikes and malicious damage
- Impact by aircraft or vehicle.
- Fixtures and Fittings
- Goods in transit
What is Public Liability Insurance?
Public Liability Insurance is a form of business insurance, which covers almost all types of businesses should consider if they deal with customers. Public Liability Insurance, is although quite a wide term and covers a wide range of situations, but on general or layman terms, it basically covers your business in case someone has got injured in some way by your business or if you have damaged someone’s property while carrying out your business activities. Considering the legal implications of the lawsuits, even a minor scratch could result in hefty fines. So, if someone is injured or their property is damaged while you were providing a service, they make take a legal action against your business in order to recover their loss and in case if this happens, public liability insurance will ensure that you don’t have to pay any legal or court costs. However, it is important to note here that public liability insurance only covers claims made by external parties, not those made by your own employees.
At times, you might be asked by the clients to produce proof of public liability insurance before they start working with you, because by displaying your certificate, firstly they gain more trust in you and secondly, they are covered from any kind of loss/injury.
When you run a business, whether on a small scale or a large scale, accidents are kind of inevitable and despite putting n number of precautionary measures in place, you cannot stop accidents and accidents can occur at your workplace or at other locations as well. So, apart from having safety policies and procedures well in place, you should also understand public liability insurance and have them in place for any exigencies. In most of the lawsuits, the injured party either claims compensation or take the case to the court or in most of the cases, the injured party could do both i.e. filing a lawsuit against your business while demanding for a hefty compensation. And this is when public liability insurance will help you in :
- Protecting your business from any kind of damages because of the lawsuit; and
- Covering the cost of legal expenses or compensation claims.
Public liability insurance, although not a legal requirement must be an integral part of your business policies, especially those businesses that have a direct dealing with the customers on a regular basis. For example, a customer slipping or tripping over is one of the most common accidents in the book resulting in a public liability insurance claim or if a member of the public were to claim that you had broken their laptop whilst visiting them on business, you would be covered for the cost of compensation owed to them, up to the limit of your public liability insurance policy.
It is important for you to tell your insurer about the nature of your business, for him to suggest type of policy best suited by you. Your insurer will suggest you if a cover policy up to £1 million would be sufficient for your business type or you would need a larger policy. For any business that you operate, having a public liability insurance is not a legal requirement, but it should be considered as an essential part of your business, especially when you are dealing with public sectors or customers on a regular basis, so it means that even if you are running your business from your home, you should, rather you must consider public liability insurance if you are using your home as a meeting place.
Public Liability Insurance might cover against claims by:
- People taking part in events or activities organized by the insured.
- Members of the public visiting the businesses of the insured.
- People watching events or activities organized by the insured.
- Independent Sub Contractors
What Does Public Liability Insurance Covers?
The protection public liability insurance offers is quite simple, but essential. In a layman word, it protects your business from legal and compensation costs in case of a lawsuits arising from injury to members of the public or damage to their property caused by your business. It could cover anything as simple as damaged caused by a coffee spill to as big as a major mishap which could result the third party in the hospital. For example, if a roofing company was hired to re-tile a roof but their weather protection feature failed, which caused a considerable amount of water leak. In this case, the client could claim for the compensation from the company. And if the company is already covered with public liability insurance, it will help it to meet the cost of the claim, along with legal expenses, if any.
Generally speaking, public liability covers the following:
- Compensation payments for the third party injury and death.
- Any and all kind of repair and replacement costs for the damaged property or possessions.
- Medical fees.
- Any kind of legal expenses, in case you decide to defend any of the claims made by the claimant.
Who Needs Public Liability Insurance?
Public Liability Insurance, although not a legal requirement, is essential for all the businesses that deal with customers or public sectors on a regular basis, whether that be visiting a client’s home or having clients visiting your workplace. There are certain businesses that must have themselves covered with public liability insurance, such as:
- Window Cleaners
- Road Maintenance Workers
- Restaurant, Pubs and Shop Owners.
- Freelancers, who deal with customers on a regular basis like private tutors, hair dressers, fitness instructors etc.
- Hair Dressers
- Private tutors
How are Public Liability Insurance Premiums Calculated?
While selecting an appropriate policy for your type of business, you need to tell your insurer about the nature and type of your business for him to help you with the right policy. He might consider factors like:
- Type and nature of your business.
- Size of turnover i.e. whether you run a small-sized, medium or large business.
- The number of employees working with you.
- Kind of claims you have been subject to in the past.
- Level of exposure/interaction to customers/clients.
- Your health and safety records.
Comparison of Various Business Insurances Available:
|Name of Insurance||Type/Nature of Business||Cover Options||Liability Options|
|Hiscox Business Insurance||Professional and Tradesman||Buildings, Contents, Business Interruption and Professional Indemnity||Public Liability up to £5,000,000 and Employers’ Liability up to £10,000,000|
|Simply BusinessBusiness Insurance||Home business, Professionals, Tradesman, Office, Salon, Shop and Pub||Buildings, Contents, Business Interruption and Professional Indemnity||Public and Employers’ Liability up to £10,000,000|
|Fastquote Business Insurance||Goods in transit||-||Public Liability up to £5,000,000|
|Premium BusinessCare Business Insurance||Professional, Surgery, Office, Salon, Shop and Pub, Commercial Property||Buildings, Contents, Legal Expenses, Business Interruption and Professional Indemnity.||Public and Employers’ Liability up to £10,000,000|
|AXA Business Insurance||Other businesses and Professional||-||Employers’ Liability up to £10,000,000|
|Insure My Business Business Insurance||Professional||-||-|
|DirectLine Business Insurance||Commercial Property, Home Business, Tradesman, Surgery, Office, Pub and Shop.||Buildings, Contents, Legal Expenses, Business Interruption||Public Liability up to £2,000,000 and Employers’ Liability up to £10,000,000|
|Novas Insurance Business Insurance||Couriers||-||Public Liability up to £5,000,000 and Employers’ Liability up to £10,000,000|
|Churchill Business Insurance||Tradesman||-||Public Liability up to £5,000,000 and Employers’ Liability up to £10,000,000|
|Trade Direct Insurance
|Other Businesses||Legal Expenses||Public Liability up to £5,000,000 and Employers’ Liability up to £10,000,000|
|PetPlan Business Insurance||Dog walkers, Home Boarders and other pet businesses||Buildings||Public Liability up to £1,000,000 and Employers’ Liability up to £10,000,000|
|NatWest Business Insurance||Tradesman||Buildings, Contents, Legal Expenses,Business Interruption||-|
|Performance Direct Business Insurance||Tradesman||Buildings, Contents, Business Interruption and Professional Indemnity||Public and Employer’s Liability up to £10,000,00|
|Intasure Business Insurance||Other Businesses||Buildings, Contents and Professional Indemnity||Public and Employer’s Liability up to £10,000,000|
If you need help with public liability insurance or business insurance, kindly get in touch with one of our experts.
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