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Public liability insurance helps protect your business from claims from third parties for bodily injury or property damage.

Imagine something as simple as going to your customer’s office, plugging in your laptop and walking away from your desk. They walk by, trip over the cable, and break their ankle.

It sounds innocent enough, but a claim for compensation could a result. Public liability insurance gives your the peace of mind, knowing that costly claims like these will be covered.

Getting Started With Liability Cover

Liability coverage is part of a system created to protect businesses from the risk of potential lawsuits or claims due to damages attributable to the company. Without proper protection, a business can be held financially accountable for any injuries, property damage, and legal costs incurred by the claimant.

Depending on the nature of the business, the third party claimant can be an employee, client, or general member of the public. Due to the severe costs associated with such a claim, many businesses small and large opt for public liability protection to safeguard themselves in the event of litigation.

Regardless of whether you own a small business or are self-employed, the need for liability protection is paramount. However, given the diversity of companies and procedures, every business carries its own unique set of risks.

Most insurance policies offer plans designed to protect against damages specific to your operations. Whereas in the past coverage consisted of funds pooled together by similar businesses, today these policies are typically provided by dedicated carriers.

What Does It Cover?

The most common culprit cited in liability claims is negligence. A business can be found negligent for a variety of reasons, from improper training to an untended wet spot on the floor. In addition to injury, illnesses and disease resulting from hazardous working conditions or excess pollutants are the responsibility of the company.

As a consequence, in the UK any business that employs another individual are required to have a liability policy of at least £5 million. For self-employed professionals and freelancers, public liability offers protection from clients suing based on negligent advice. In fact, negligence applies not only to the delivery of defective products or services, but to the lack of proper warnings or instructions while marketing these products.

Furthermore, any damage to property is covered by most plans. For example, contracted workers such as plumbers and electricians can be responsible for the cost of repairs to an entire building caused by a single mistake. Breach of confidentiality, copyright, or trade secrets also falls under the umbrella of negligence. Whereas negligence focuses on the conduct of a business, a company can be liable for unintended manufacturing defects as well.

Journalists found libel for statements made in an article or blog post represent another common example of the advantages of public liability cover. In essence, a strong liability policy shields businesses and professionals from the capricious errors, defects, and resulting litigation that can befall a company during normal operations.

How Premiums are Calculated

In exchange for a monthly premium, the insurance carrier will normally cover the cost of legal fees, expenses, and hospital bills the business is deemed liable for. Generally, the more factors covered by an insurance policy, the higher the premiums. When calculating your premium, most insurance agents will employ a book rate based on claims paid out to similar businesses. Demonstrating an excellent safety record and proper risk management can help lower the cost of your obligation.

When assigning you a figure, an insurance underwriter will weigh the risk of liability for your company based on a number of mitigating factors, such as annual income and operating procedures. Certain industries will generally fall into higher risk categories than others. An error by an architect, for example, can result in an inordinate amount of damages resulting in the demolition and reconstruction of a building.

Those who wish to lower their premiums can opt to pay for a higher excess or seek a lower amount of coverage. However, this may result in inadequate coverage should a claim occur. Knowing the factors that determine the cost of your premium and concentrating only on areas that are applicable to your business may provide a cheaper and more elegant solution.

Types of Cover Available

Every business faces its own individual challenges and risks. In an office, a small business owner is responsible for the health and safety of their employees. A financial adviser or attorney may be held liable for the words they speak. A company that manufactures products must ensure that these items are safe for their clients to use. In fact, for many professions liability coverage is compulsory in the UK.

Although many insurance plans are made flexible to adapt to your specific needs, most policies fall into one of the following categories:

  • Public
  • Product
  • Professional
  • Employers
  • Personal
  • General