5 Things You Might Not Know About Public Liability Insurance
Public Liability insurance is one of the most common forms of business insurance, and for many businesses it is a requirement of contracts, leases or industry arrangements. As a result, it can be easy to think of it as simply another box to tick when setting up or running a business.
But there is more to Public Liability Insurance than simply having a policy in place. The nature of your business activities, where you operate, who you work with and how you respond when something goes wrong can all affect your liability exposure.
Here are five things you might not know about Public Liability insurance that are worth considering.
1. Public Liability Applies Beyond Customer-Facing Businesses
Public Liability is not limited to businesses that have customers or members of the public regularly entering their premises. A business can create a liability exposure wherever it conducts its activities. A business providing services at a client's premises, a manufacturer delivering goods, a retailer hosting customers, a professional conducting work on-site or a contractor undertaking work at a third-party location can all potentially cause injury or damage to third-party property in the course of their business activities. For this reason, where your business operates and the activities it undertakes are important considerations when arranging Public Liability insurance.
The nature of your work can also change over time. If your business begins taking on different types of projects, working at new locations or expanding into new activities, it is worth discussing these changes with your broker to determine whether your existing arrangements remain appropriate.
2. Subcontractor Insurance Does Not Replace Your Own Liability Cover
Using a subcontractor who has their own Public Liability Insurance is an important risk management measure, but it does not automatically remove your business's own liability exposure. Your business may still have responsibilities arising from the work being undertaken, the contractual arrangements in place or the circumstances surrounding an incident. It is therefore important to understand what insurance your subcontractors hold, whether it is appropriate for the work they are undertaking and whether their policy remains current.
For businesses that regularly use subcontractors, checking certificates of currency and maintaining appropriate contractual arrangements can form an important part of managing liability risk. Most importantly, a subcontractor's insurance should not be viewed as a substitute for your own Public Liability cover.
[Read: Top 5 Clauses You Shouldn't Ignore in Your Policy Wording ]
3. Public Liability Extends Beyond Personal Injury
Personal injury is an important part of Public Liability, but it is not the only exposure. A business can also face a claim if its activities cause damage to someone else's property. For example, a business could accidentally damage equipment or other property belonging to a customer or another business in the course of its activities. No one may be injured, but the resulting property damage could still lead to a significant claim.
The cost of a property damage claim may also extend beyond the cost of repairing or replacing the damaged item. Depending on the circumstances, a third party may also seek compensation for financial losses resulting from the damage, for example, where the damaged property affects their ability to operate their business.
[Read: Business Interruption Risks Beyond Property Damage ]
4. A Claims-Free History Does Not Guarantee Adequate Cover
A claims-free history is certainly positive, but it does not necessarily confirm that your insurance continues to reflect your current business. You may have expanded your operations, taken on larger contracts, increased your use of subcontractors, introduced new services or begun working in different environments. These changes can alter the nature or scale of your liability exposure, even if your business has never made a claim.
Your annual renewal provides an opportunity to review your insurance, but significant changes should be discussed with your broker when they occur rather than waiting until the next renewal. The objective isn't necessarily to increase your level of cover. It is to make sure your insurance remains appropriate for the business you are operating today.
5. How You Respond to an Incident Can Affect the Claims Process
When an incident occurs, a business may be keen to resolve the matter quickly, particularly where the circumstances appear straightforward. However, liability is not always clear at the time of an incident, and an early admission of liability or agreement to compensate another party can affect how a claim is subsequently assessed.
Public Liability claims are considered based on the circumstances of the incident, the legal liability of the insured and the terms of the policy. Where a business has already accepted responsibility or agreed to pay for damage, this can complicate the insurer's ability to investigate and manage the claim.
This is why claims should be referred to the insurer or broker promptly, with relevant information about the incident provided so that the circumstances can be properly assessed. Records, photographs, correspondence and other evidence can also assist in establishing what occurred. The insurer can then assess the circumstances and determine how the claim should be managed in accordance with the policy.
[Read: The Most Common Reasons Insurance Claims Get Rejected ]
Understanding you liability exposure
Public Liability insurance is an important part of managing the risks associated with running a business, but the most appropriate cover depends on the nature of the business, its activities and the environments in which it operates. Taking the time to understand your potential liability exposures and reviewing your insurance with your broker when your circumstances change, can help ensure your business is better prepared if an incident occurs.
How Coverforce can help
Coverforce can help you assess your business's liability exposures and arrange Public Liability insurance appropriate to your circumstances. Speak with a Coverforce broker to review your current cover or discuss your insurance needs.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly.
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