In order to understand just why it is that your company needs to invest in public liability insurance, it is essential to gain a decent understanding of what public liability insurance actually is. Public liability insurance is a type of insurance that protects businesses – irrespective of size – against any injuries that are brought against a person, or damage brought against someone’s property, that occurs as a direct result of an action carried out by a business and/or its employees.
It is impossible to name absolutely every type of scenario that is covered by a public liability insurance policy, but the major categories that come under the umbrella of public liability insurance include bodily injuries, damage to property and loss of property. It also provides cover for any third party property damage that might occur as a result of the work that a business carries out. This sounds a little complex, but all it basically means is that if the property of an associate of a customer gets damaged, for instance the car of a neighbour during house repairs, then this will be covered by public liability insurance.
As a business owner, you are legally liable for any claim that is made against your company for injuring someone or for causing damage to someone’s property, as well as for bringing about the loss/theft of someone’s property. This legal obligation means that it is down to your company to subsidise the cost of any legal action, as well as any compensation monies that are awarded to a claimant who has successfully filed a case against your company. Without public liability insurance to foot the tremendous cost of legal action and payouts, a company can face massive losses. Historically, many companies have been made bankrupt because of legal fees and compensation payouts.
It is important to realise that the magnitude of your company, along with the nature of its business, will affect the amount that an appropriate public liability insurance policy costs. The coverage limitations of your public liability insurance will be set by the provider, and whilst a coverage limit of £1 million may suffice for a soul trader with a carpentry business, it is likely that such a policy would prove inadequate for a large construction company that builds skyscrapers. Naturally, an insurance company will charge the larger business concern, with larger coverage limits, a great deal more for insurance than it would the individual with the carpentry business.