Your business operations can cause bodily injuries and property damage to third parties, which may result in liability claims. While the severity of such incidents varies from one industry to another, every business is at risk provided it interacts with clients directly. For instance, according to the US Consumer Product Safety Commission (CPSC), more than 29 million injuries in America result from unsafe products. This makes public liability insurance coverage vital. While this policy will not prevent accidents or property damage from happening, it should protect your business finances from claims in case they happen. Here’s some more information about public liability insurance coverage.
What is Public Liability Insurance?
From the name, the public liability insurance policy provides coverage for bodily injuries and property damage cases that your business causes on third parties and the general public. For instance, if one of your fleet vehicles crashes into a roadside building, causing it to tumble down, the owner will most likely sue you or claim compensation. If you pay for the losses out of pocket, high chances are that you will harm your business finances. Thankfully, a public liability insurance policy will cover these costs, including the legal costs if the case goes to trial.
What Does Public Liability Policy Cover?
The public liability policy covers incidents that either happen on your business property or directly relate to your business activities as follows:
- Bodily injuries — If a client sustains injuries from slipping and falling on a wet floor in your premises, the public liability policy will pay for the resulting medical expenses.
- Property damage — The policy also pays for third-party property damages related to your business operations. For instance, if your employee fells a tree in your premises, which ends up hitting a client’s car in the parking area, the public liability policy will cover the costs associated with the damage.
- Legal expenses — In case a third party sues you for bodily injury or property damage, this policy will also pay for the legal expenses, including hiring an attorney to represent you.
- Death — In worst cases, an accident on your premises or a faulty product can cause death. In such cases, this coverage will pay for funeral expenses and compensate the victim’s family.
Public Liability Insurance Exclusions
Like any other insurance policy, there are certain aspects that your public liability insurance will not cover. They include, among others:
- Intentional acts such as a rogue employee deliberately pouring hot coffee on a client’s designer purse
- Defamation and slander
- Injuries and property damage caused by negligence
- False arrest
- Mental loss or damage
- Injuries that happen outside your business property
Take note that you can negotiate with your insurance provider to cover some of the exclusions at higher premiums, although this is usually unlikely. For more comprehensive coverage, you can also consider purchasing general liability insurance instead.
Who Needs Public Liability Insurance?
The federal government requires businesses to have workers’ compensation insurance, disability policies, and unemployment coverage in case they have employees, according to the Small Business Administration (SBA). However, public liability insurance is optional in the U.S. As such, you should evaluate your business to determine whether you need this coverage, although it is prudent to have some kind of liability insurance. Consider buying public liability policy if: –
- Clients come to your premises
- You operate a high-risk business such as a construction firm
- You manufacture high-risk products such as pressure cookers
How Much Does It Cost?
The cost of public liability insurance varies from one insurance provider to another. More specifically, it depends on factors such as:
- State laws
- Number of inclusions
- Nature of your business operations and the size of risk involved
- Size of coverage.
For instance, data from Publicliabilityaustralia.com.au indicates that transport, construction, and agriculture are among the riskiest industries in Australia. This means that if you run a business in such industries, your public liability insurance premiums may be high. Even so, you can possibly lower it by asking for discounts from the insurance company or mitigating the risk. For example, in a business where clients keep coming on the premises, you can give them personal protective equipment and put clear warning signs for wet floors, loose fixtures, as well as out-of-bounds places. Whatever improvement you make to lower the risk, ensure you inform the insurance provider. It is worth noting that public liability provides limited coverage, and therefore, it tends to be relatively inexpensive.
These are some of the important facts about public liability insurance. As such, you should purchase this coverage to protect your business from lawsuits and third-party claims that may harm your business finances. Take note that nearly all businesses are at risk of third-party liability, and hence, having this policy is a good way to plan for the future.