Liability Insurance is an essential cover for any business owner & should form a key component of your asset protection.
Although many people refer to this insurance as Public Liability cover, it’s important to note that Liability insurance is a combined policy providing both Public & Products Liability insurance, with both covers provided automatically. You can’t normally purchase just one component of the cover.
What Is Liability Insurance?
Liability insurance protects a business in the event that an individual(s) person is injured or someone’s property is damaged, due to the actions or activities of a business and its employees. This covers everything from a small scratch on a person’s car to a person being permanently disabled due to slipping, tripping or falling. It’s a very broad type of cover and it is an absolute necessity to protect your business when accidents happen.
The policy will cover the business, including subsidiaries, along with all of the employees, partners, directors, and possibly anyone else who is acting on behalf of the business.
The policy provides funds for settlement to third parties & also covers the relevant legal costs which might be incurred, in addition to the sum insured (generally), which can includes court costs & expensive legal fees.
Is it Required?
Businesses and sole trades are not legally required to have a liability policy but you may find your customer or client requires proof of insurance cover prior to agreeing to engage your services. Aside from this, businesses without this cover expose themselves to extreme risk of financial distress should an accident occur that they are liable for.
Liability insurance cover provided is Australia wide, meaning that you are covered regardless of where an incident might occur. Home-based businesses should obtain liability insurance, regardless of whether clients visit the home. This is because the implications of accidents can have a huge impact on the business no matter where they occur. Simply opening an umbrella whilst down the street to visit the post office can have consequences if you manage to hit someone in the face!
Every business, from small to large, should have a liability insurance policy. For a relatively small outlay, cover of at least $5 million can be obtained.
A liability insurance policy protects the policy owner in the event of an injury to an individual, which includes clients Australia wide & obviously including if the injury occurs on the business’s property. Common scenarios include slip and fall accidents, injuries due to negligence, and injuries from accidents caused by employees. A claimant may potentially seek reimbursement for medical bills, time away from work, and other costs related to the accident. Without a liability policy, the business itself would have to respond to requests for payment all of these costs.
These policies also cover damages to another party’s (could be an individual or another business) property caused by the actions of your business including employees. For example, an electrician incorrectly wired a house and that house later caught on fire due to the incorrect wiring, the electrician & /or his company could be sued.
Misleading and False Advertising
Cover can extend to include Advertising Liability. Businesses have to promote their services in order to obtain more clients, customers & sales. Occasionally other businesses or individuals may take umbrage to your promotional activities & advertising. The liability cover can provide protection even in this scenario. So allegations of false advertising, slander, libel or even breach of copyright can be met under your Liability policy.
Any business that publishes content in print form or online needs to have this type of protection included in your Liability policy.
Cover tailored for you
These are the basic liability insurance policy covers. Business owners should work with an insurance broker to determine their exact needs and to create a policy that addresses their risks.
As we all know accidents happen that could potentially destroy someone’s possessions or even lead to fatalities, it’s vital that all companies have adequate insurance cover.