Liability Insurance helps protect business owners against the risk of potentially very costly claims.
If you run a business or are self employed, then you will already be aware that you need some form of Liability Insurance.
There are a number of types of Liability Insurance to understand…
If your business deals with the public or other businesses in some format, you should protect your business by taking out a public liability policy – fit for the type of work you carry out – or you risk being sued for extortionate amounts of money.
Some business contracts even require a Public Liability policy, so you could also lose work if you don’t have it.
Public liability cover ranges between £1million and £20million and thus your insurance premium depends on this.
Premiums start as low as £50 for some trades so why run the risk of having no public liability insurance.
This protects an employer, should an employee or former employee sue for illness caused by their work or if they suffer an injury at work – on or off site, even if time has passed since their employment. Employer’s Liability covers the cost of compensation and legal fees.
Any small business – whether run from commercial premises or working from home, if there is at least one employee, the business owner has a legal obligation to hold employer’s liability insurance.
The statutory minimum indemnity limit required is £5million, although policies generally provide cover for £10 million. Failing to hold this insurance can lead to The HSE fines being issued.
The law states that employers are responsible for the health and safety of their employees whilst at work, which means in the event of a claim, an employer could end up owing hundreds of thousands of pounds.
Employers Liability insurance is usually added to a Public Liability policy for Tradesman and Contractors, whereas those in the retail and hospitality trade would have a ‘package’ policy which would include this automatically.
Professional Indemnity / Professional Liability – also known as errors and omissions insurance
This insurance is relevant if you offer or give professional advice to others – as it covers you in case someone complains about the advice or service they have been given. This type of insurance covers you against professional negligence claims – such as your client losing money based on the advice you gave or omitted to give.
This type of insurance used to be for the professions such as, accountants, financial advisers and insurance brokers, however, a broad range of businesses will now benefit from this protection.
Even those in the construction industry and related trades, especially if there is an element of design involved in the contract, can benefit from a professional liability policy.
Usually, within an annual policy there are various levels of cover/limits of indemnity available from as low as £50,000. Your particular policy would depend on your work – which your broker can tailor to you.
Speaking to your broker about your business and practices can help you determine which Liability cover would be best for you.