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There are four main types of liability insurance
- Public Liability Insurance
- Employers Liability Insurance
- Product Liability Insurance
- Professional Indemnity Insurance
Public Liability Insurance
Public liability insurance is designed to cover businesses in the event that they are sued by a third party who feels that they have suffered a loss as a result of that company's negligence (lack of care). In this instance the company could be taken to court and sued for thousands of pounds. Even if it is established that the company did not act negligently and subsequently no damages are awarded against them they could still have a large legal bill to pay. Public liability insurance is designed so that in the event that you are successfully pursed by a third party you will have the adequate financial backing to pay the cost of the claim. If you do not have public liability insurance and a third party successfully pursues you for compensation you will be liable to pay the full amount to the claimant. The insured level of damage payments is set according to your individual requirements. The limits are typically up to £5m although higher levels can be arranged where required.
Here are two examples of how a public liability insurance claim could arise:
Car Mechanic: A client walks in to a garage and slips over some spilt oil and breaks their leg. Due to the car mechanic not cleaning the oil up or putting a sign out warning clients to be cautious they could pursue him for compensation.
An Electrical Contractor: During the rewiring of an old house the electrical contractor fails to ensure that their work is done properly and subsequently there is a fire. Due to the negligence (lack of care) of the electrical contractor they could be liable to be sued by the third party who owns the house. Click on one of the questions below:
What is public liability insurance?
Public liability insurance is an insurance policy designed to cover your business in the event that you cause bodily injury or death to a member of the public or damage to a third parties property. A third party could claim that as a direct result of your negligence they have suffered a loss whether it is damage to their property or they have suffered a bodily injury. In the event that you are pursued by someone who feels that your business activities are a direct result of their loss they could sue you for compensation/damages. If you do not have public liability insurance you ill be liable to pay the cost of the compensation awarded against you, this often runs into thousands of pounds. If you are unable to pay the compensation a court may pursue you for your home, you vehicles and any other assets that you have. If you have public liability insurance then the policy will pick up the cost of the claim minus the excess which is usually around £250. Having public liability insurance will not prevent claims from happening, however it will pick up the cost of compensation to be paid out in the event that there is one. Public liability insurance claims are notorious for running into hundreds of thousands of pounds, in the United Kingdom last year around £5.5 billion was paid out in liability claims.
What is the difference between professional indemnity and public liability insurance?
Professional indemnity insurance will cover your business in the event that a third parties business suffers a financial loss as a result of your professional negligence. For example if you are a building surveyor and survey a building, give it the all clear but in fact the building needs a number of repairs made to the house which were not in the surveyors report, consequently the buyer of the property has to pay £30,000 for repairs etc. As the third party (in this case the property purchaser) has paid out a large amount of money which he was not aware he would have to pay he could in fact sue the building surveyor for his out of pocket expenses, i.e. the £30,000 spent on repairs. Public liability insurance will only cover you in the event that a third party suffers damage to their property, physical bodily harm or death. So if a builder fails to take adequate precautions and as a result of their negligence a customer trips over a ladder, they subsequently sue the builder for compensation. The key difference between professional indemnity and public liability insurance is that public liability insurance will cover you in the event that a third party suffers bodily injury or death, it will also cover you in the event that you damage a third parties property, professional indemnity concentrates on covering third parties in the event they suffer.
Is public liability insurance compulsory by law?
Compulsory insurance means that you must have a minimum level of cover to operate legally. The greatest example of compulsory insurance is private motor insurance; the law says that in order for you to legally drive on the road you must have a minimum level of cover (typically third party only insurance). Public liability insurance is not compulsory by law like employers liability insurance. It is however essential insurance cover for a business to have. In the event that you cause damage to another persons property or cause death or bodily injury you could be sued for compensation/damages. You will be liable to pay for the compensation awarded against you if you do not have public liability insurance. Public liability insurance claims are notorious for running into hundreds of thousands of pounds. If you are unable to pay the compensation which has been awarded against you a court may try and pursue you for any assets you have i.e. your home, your cars and any other assets which you may have.
Is public liability insurance and product liability insurance the same thing?
Product liability insurance will cover your business in the event that you provide a product to a third party which due to it being faulty or its poor design it causes damage to property, death or bodily injury. Public liability insurance will cover your business in the event that due to your negligence (lack of care) a third party suffers a loss i.e. bodily injury or death and/or damage to property. The difference between product liability and public liability insurance is that under a public liability insurance policy you will not be covered in the event that you provide a faulty product to a third party. However product liability is usually thrown in with a public liability insurance policy. Under a public liability insurance policy you will typically be covered for £1 million or £2 million which is an ample amount to sufficiently cover you business.
Is public liability insurance expensive?
Public liability insurance can be expensive, depending on your business activities, the level of cover you require, your turnover and the number of employees your business has. The main factor which is taken into consideration is your business activities; this is because some activities are deemed to be riskier than others. For example a roofer using heat work can expect to pay more for their insurance than a bricklayer. The reason for this is that if a roofer has an accident it is more than likely to be more severe than a bricklayer. At Halton Insurance we deal with over 15 insurance specialists to ensure that we are able to provide our customers with the best possible premiums and the most comprehensive cover available.
How can I get a quick quotation for public liability insurance?
The time it takes to get a quotation for public liability insurance depends on the size and complexity of your business. If you are a small tradesman with fewer than 8 employees, quotations can typically be given instantly. If your business is classed as high risk (i.e. roofing contractors, scaffolders, asbestos removers and civil engineers) quotations can take between one and five days. The key determining factor as to how long a quotation will take is your business activities, the number of employees your business has and your company's turnover.
I only run a shop do I really need public liability insurance?
Irrespective of what business you operate public liability insurance is an essential insurance policy which no business should ideally operate without. If you have a claim for compensation awarded against you your business will be liable to pay it if you do not have public liability insurance. Public liability insurance will cover your business in the event that you cause death or bodily injury to a member of the public or damage a third parties property.
I can not find anyone who will provide me with public liability insurance what should I do?
If you are having difficulty finding public liability insurance due to the nature of your business then Halton Insurance can help. We deal with over 15 insurance partners who are specialists in their fields; we can insure most businesses within the UK .
Can I buy public liability insurance on its own?
You are able to purchase public liability insurance in isolation (i.e. on its own), although product liability insurance typically comes free with it. Some insurance companies will not sell you public liability insurance without employer's liability insurance if your business has employees.
What level of public liability insurance cover should my business have?
The typical level of cover under a public liability insurance policy is £1 million or £2 million. There is no limit as to how much cover you can have, more and more businesses are taking out cover for £5 million although £2 million is ample cover.
What is the difference between employer's liability insurance and public liability insurance?
Employer's liability insurance will cover your business in the event that one of your employees sues you claiming that as a result of your negligence (lack of care) they have suffered a bodily injury or death. Public liability insurance will not cover your business against this as the cover is only concerned with insuring your business against claims from third parties. Another difference is that public liability insurance is currently not compulsory by law, employers liability insurance is.
What are the consequences of me not having public liability insurance?
Public liability insurance will cover your business if a third party decides to sue you for compensation as due to your businesses negligence (your lack of care) they have suffered a loss, i.e. bodily injury and/or death. Public liability insurance claims are becoming more frequent as members of the public have a greater awareness of their rights and since the introduction of no win no fee claims help people have found it even easier to make claims against unsuspecting businesses. Public liability insurance claims easily run into hundreds of thousands of pounds, if you business does not have insurance you will be liable to pay whatever amount is awarded against you. If you have £500,000 awarded against you by a court your business will be liable to pay it, if your business does not have the funds then you could personally be pursued. A court can pursue you for any assets which you have i.e. your home, cars and any other assets which you may own. Although public liability insurance will not prevent a claim, it will help you in the event that there is one. Running a business is a risky business, do not make things more difficult by not having the adequate needed to fully cover your business.
How often do public liability insurance claims happen?
Public liability insurance claims are becoming more frequent due to two reasons: Members of the public are becoming more aware of their rights and the law since the introduction of 'no win no fee' claims services people have found it even easier making claims against unsuspecting businesses. In the United Kingdom last year there was £5.5 billion* paid out in liability insurance claims. Do not risk your business going under due to not having the adequate insurance to fully protect your business. At Halton Insurance we work with over 15 insurance specialists, we are able to offer business insurance to most industries including high risk construction contractors and manufacturers. Standard off the shelf insurance policies are not always appropriate. We realise that no two businesses are the same so therefore the same insurance policy will not fully cover their businesses, we offer tailored insurance policies designed to cover your business against all eventualities. Employers Liability Insurance
If you employ staff you have a legal requirement to take out Employers Liability Insurance. Your employees must be covered against bodily injury, illness or disease sustained in the course of employment.
Employer Liability Insurance (EL) cover enables businesses to meet the costs of compensation and legal fees for employees who are injured or made ill at work through the fault of the employer. It also means that employees injured due to an employer's negligence (lack of care) they can seek compensation even if the business goes bust. The law states that as an employer you must have a minimum of £5 million worth of employer's liability insurance. Most insurance companies automatically provide you with double the amount, £10 million. Employers liability insurance is compulsory by law in England , Scotland and Wales .
Here are two examples of employer's liability insurance claims:
A scaffolding contractor sends a couple of employees to dismantle some scaffolding, whilst carrying out their business activities an employee falls from the scaffolding and subsequently suffers physical harm. As the employer did not advise their employees of adequate safety guidance, the employee who has suffered an injury subsequently sues his employer. Due to the employers negligence (lack of care) they are held responsible for the accident. A motor trader who carries out bodywork on vehicles, does not enforce that all employees must wear face masks whilst spraying cars in a spray booth. As a result of the employers negligence, i.e. not enforcing employees wear adequate safety equipment, a number of employees sue the employer for damages as they have suffered physical harm. Even if an employee has left your employment they could still pursue you for damages if it is deemed that during the course of their employment they had suffered due to your negligence.
Employers Liability (Compulsory Insurance) Act 1969 A Guide For Employers This guidance reflects the requirements of Regulations which came into effect on 1st January 1999 Most employers are required by the law to insure against liability for injury or disease to their employees arising out of their employment. This guide is intended to help you to understand what is required. It is not a legal interpretation of the Employers' Liability (Compulsory Insurance) Act and it has no legal status. You should be aware that only the courts can authoritatively interpret the law.
What is employers' liability insurance?
You are responsible for the health and safety of your employees while they are at work. Your employees may be injured at work, or they or your former employees may become ill as a result of their work while in your employment. They might try to claim compensation from you if they believe you are responsible. The Employers' Liability (Compulsory Insurance) Act 1969 ensures that you have at least a minimum level of insurance cover against any such claims. Employers' liability insurance will enable you to meet the cost of compensation for your employees' injuries or illness whether they are caused on or off site. However, any injuries or illness relating to motor accidents which occur while your employees are working for you, may be covered separately by your motor insurance. Public liability insurance is different. It covers you for claims made against you by members of the public or other businesses, but not for claims by employees. While public liability insurance is generally voluntary, employers' liability insurance is compulsory. You can be fined if they do not hold a current employers' liability insurance policy which complies with the law.
Do I need employers' liability insurance if my employees work abroad or my company is based abroad?
If any of your employees are normally based in England , Scotland or Wales (including offshore installations or associated structures) you must have employers' liability insurance. You do not need employers' liability insurance under English law to cover any of your employees who are based abroad (e.g. If they are on secondment). However, you should check whether the law in the country where they are based requires you to take out insurance or take any other measures to protect your employees. If any of your employees are normally based abroad but spend more than 14 days continuously in Great Britain , or more than seven days on an offshore installation, you will need employers' liability insurance under English law.
Which insurance companies can sell me employers' liability insurance?
You must use an authorised insurer. If you do not, you may be breaking the law. You should check that your insurer is authorised before you take out employers' liability insurance. Authorised insurers are individuals or companies working under the terms of the Financial Services and Markets Act 2000. The Financial Services Authority (FSA) maintains a register of authorised insurers. You can check whether a company is authorised by searching their register on www.fsa.gov.uk, or telephoning the FSA on 020 7676 1000
How much cover will I need?
You must be insured for at least £5 million. However, you should look carefully at your risks and liabilities and consider whether you need insurance cover of more than £5 million. In practice, most insurers offer cover of at least £10 million. If your business is part of a group, a policy for employers' liability insurance can be taken out for the group as a whole. In this case, the group as a whole, including subsidiary companies, must have cover of at least £5 million. You can have more than one policy for employers' liability insurance. However, the total value of the cover provided by the policies must be at least £5 million. You should bear in mind that the £5 million minimum level of cover includes costs, so you may wish to purchase cover of more than this.
Do I need to tell my employees that I have employers' liability insurance?
When you take out or renew a policy, your insurer will give you a Certificate of Employers' Liability Insurance. This must state clearly the minimum level of cover provided and the companies covered by the policy. You must display a copy of the Certificate of Insurance where your employees can easily read it. If you have employees working in the Isle of Man , Jersey , Guernsey or Northern Ireland as well as in England , Scotland or Wales you can use the same certificate in all locations. However, you must check that this complies with any local requirements as well as English law. If your employees work on offshore installations or associated structures, you do not need to keep a copy of the certificate on every installation. However, if one of your employees asks to see a copy of the certificate, you must provide one as soon as possible and certainly within 10 working days of their request. You can provide a copy by fax if this is easier for you.* * The requirements described in this paragraph came into force on 1 January 1999 .
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