There are many types of insurance that small business owners can purchase to protect their business. As with all businesses, there are certain risks associated with running a small business and adequate risk management is required. Public liability insurance is one way to manage this risk.
This type of insurance exists to protect against injury done to other parties. But how many small business owners get public liability insurance? Is public responsibility important to small business owners? What are the potential scenarios that could arise if you don’t have this insurance coverage? Let’s see.
What is Public Liability Insurance?
public liability insurance will protect your small business from any liability claims brought against you. If your business causes injury to third parties or results in property damage to others, your insurance policy will cover you and pay damages and compensation up to a certain amount. You can also claim any legal costs you may face when an injury claim is filed against your business.
Is Public Liability Insurance Important for Small Businesses?
It can be said, micro and small businesses need more insurance than other types of businesses. All scales and types of businesses have certain responsibilities towards third parties. This includes responsibilities to customers, suppliers, employees and society as well as all third party property.
And when you have a responsibility like that, there’s always the possibility of something going wrong. Even when you do everything right and try to manage risk internally, there is always the possibility of an accident. Complaints against your business can not only damage your reputation, but also negatively impact your finances while you pay compensation and legal fees.
While large companies may be able to absorb such incidents and recover quickly, small businesses can be pushed into bankruptcy.
There are many types of insurance coverage that small businesses can take advantage of. Of these, the most vital type of coverage is public liability insurance and it should be mandatory for most small businesses to be held publicly accountable. With the right type of public liability insurance, you can cover that your responsibility towards your customers and protect your company from financial loss at the same time.
What Coverage Does Public Liability Insurance Provide?
As mentioned earlier, there are two types of risk covered by your public liability insurance: damage to other people’s property and personal injury to third parties. This insurance is not required by law, but it will give you peace of mind as a small business owner.
In addition, you will find that public responsibility policies are usually customized for each individual business.
Here’s an example of a scenario where the protection works. If visitors to your office building are injured or suffer harm while there, they may file an injury claim against you. You will have to pay for medical expenses or replace property that may have been lost. You may think that the chances of this happening are remote, but if it is, the damage to your reputation and finances will be significant unless you are covered.
Note that the term ‘personal injury‘ can refer to a number of injuries as per the policy, ranging from illness, death, bodily injury, shock, mental suffering and injury, false arrest, malicious prosecution, wrongful detention, battery, assault, wrongful expulsion, slander, defamation and others injury.
Next we come to property injuries. Traders who operate their own businesses are also advised to purchase public liability insurance to protect them against accidental damage they may cause to customer property. This type of insurance policy can be combined with other types of insurance policies for greater protection, and is usually included in merchant liability insurance coverage.
If you own a roofing company, for example, and fail to use proper weather protection, leading to serious water damage, then your client will come to you seeking compensation to pay for the damage. If you have public liability insurance, you will be able to pay to repair the damage.
Property damage usually means actual physical destruction or loss of tangible property. But it can also include damage to tangible property leading to some other physical property rendering it unusable as a result.
In the case of minor injuries caused by third parties, the costs to your business may be small or even negligible. But if your business activities result in cuts or even death, then the potential costs could be hundreds of thousands of dollars, if not millions.
What Does Public Liability Insurance Not Cover?
You should know what your public liability insurance does not cover. Remember that it will not cover injuries caused by you or your employees while on your work site. This only applies to third party injuries.
Also, insurance will cover damages caused by members of your staff. But it will not cover any injury or damage caused by the subcontractor you hired. This is why it is advisable for all contractors to have their own public liability protection.
What Levels of Cover Are Available?
Depending on the size and type of business you run and the agent or company you purchase insurance from, you can choose from a variety of coverages. Typically, you can buy covers that range from $5 million to $20 million.
You can easily customize the quotes offered by most insurance companies and find out how your premiums are affected by different levels of coverage. Many insurance companies offer online quotes and you can buy insurance online to apply immediately.
But it is also helpful to take the advice of an insurance agent to determine what type of insurance you need, and how you can combine various insurance policies and effectively lower your risk.
Whether you are a trader or a stall keeper at a trade show or in a marketplace, you must protect yourself from potential injury to your customers. Most small business owners understand how important public liability insurance is, but some still wonder if it’s worth it. This article will help the business owner make a decision.
James fish is an insurance consultant from Melbourne, Australia.
