Protect your business against claims with this simple guide and get answers to the following questions: What is public liability insurance? Why is it important? What does it cover and what it doesn’t?
Public liability insurance is a type of business insurance that protects companies against compensation and damage claims from accidents and injuries which happen in relation to business operations. It covers the insurance cost of the incident claimed by the affected party—like the general public, or other third-parties such as customers, suppliers, or subcontractors.
This type of policy covers the claim expense of incidents that happened within business premises and claims of damage to someone else’s property involving a business and its activities.
The general goal of public liability insurance is to protect businesses from losing too much money because of public claims and avoid costly litigation processes that may significantly affect companies and how they operate.
Unlike the mandatory workers compensation insurance, public liability insurance is not a legal requirement that government and regulating bodies enforce. Its significance varies depending on the industry the business is in, but if the company operation involves plenty of people and other stakeholders, it may be best to take advantage of the security this insurance policy brings.
Avoid huge financial loss – In 2015, a West Virginia woman suffered severe injuries after a bad fall that happened within the business premises of a multinational retail company. This led to a $16 million personal injury claim which the plaintiff won in 2019. Cases like this show that a single claim may incur a significant monetary loss and be detrimental to the status of a company. Public liability insurance protects businesses against these types of incidents and helps avoid financial implications that can put a strain on the company and its assets.
Prevent interruptions in operations – Aside from financial loss, claims that resulted in legal litigations affects business production and can cause changes to the way the company operates. Public liability insurance may even save companies from bankruptcy as the legal procedures are often quite high-priced and mostly tend to span over a considerable length of time.
Steer clear of bad publicity – Being seen as an unsafe and uncaring company significantly affects the hard-earned reputation businesses always work towards. Public liability insurance helps reduce this possibility by offering a secured set-up in case of injury and accidents involving a company and its activities.
The details and conditions of a public liability insurance vary depending on the industry the business is in. Different indicators are also considered depending on the size and type of the company. But what does public liability insurance really cover and what does it not?
Public liability insurance typically covers incidents that happened within business premises or when business operations resulted in damage to someone else’s property. Below are some of the common public liability inclusions:
Legal costs ordered to pay as a result of a covered claim
Cover for injuries (bodily and personal), as well as death to a third party
Cover for loss or damage of goods – owned by someone else’s but are in your care, custody, or control
Loss or damage of someone else’s property that occur while performing your business activities
Liability arising out of damage caused from a third party acting on your business’ behalf
Compensation to others who sustain injury while visiting your premises, as well as first aid expenses incurred at the time of the incident
The exclusions from a public liability insurance differ based on the policy and is best determined though the product disclosure statement, however, being knowledgeable on this can be advantageous for you and your business. Below is a list of some of the scenarios this specific insurance doesn’t normally include:
Workers or employee injuries – as previously mentioned, this is usually covered by the workers’ compensation insurance
Punitive damages – the extra damages awarded if a judge believes your behavior was extremely despicable
Aircraft products – these are usually covered under different aviation insurance
Asbestos – also commonly covered by a separate asbestos liability insurance
Products recalls and withdrawals
Gradual pollution caused by company operations
The higher the risk, the higher the level of public liability insurance a company should avail. It also considers the extent of contact the company has with the general public, as well as other factors that would significantly affect the insurance cost and conditions. It is best to reach out to an industry expert to know exactly which public liability insurance is best for your business.
Companies put counter measures in place to avoid scenarios that could potentially hinder operations and tarnish their reputation. This may include regular assessment of the policies in the workplace, consistent communications with employees or stakeholders, and promoting transparency from all parties involved. Whatever it is, it’s important to do everything to limit your risk exposure to claims and lawsuits. Below are some of the best practices that may help in accomplishing this:
Always be updated about the procedures and policies surrounding your business and its operations. It would help to monitor the changes and execute audits to ensure that all actions, systems, and strategies done by the company are in line with the current regulations and industry best practices.
For every transaction with clients or other parties, keep a written and signed agreement that clearly mentions the conditions and scope of the job to be performed. Include important details such as timeline/deadline, as well as fees and other amounts to be paid. Also state if there are risks associated with the project and who will specifically be responsible for them.
Make it a point to deliver what is expected and promised according to contracts and agreements. While some clients are more understanding, there are aspects that may cause others to not take these issues lightly (e.g., deadlines, deliverables, financial factors). Monitor and address these to avoid negative impact to both parties.
Proactively perform regular audits to your business and its operations. Keeping up with the current regulations and law in your region will help ensure that all the relevant industry practices are integrated into your business processes. Also make sure that employees are properly trained on the industry requirements to help avoid unnecessary mishaps in operations.
Businesses are also subject to insurance inspections, so proactively reviewing the property and addressing any hazard it may have allows for a favorable inspection result.
Think about the type, size, industry, and various other factors usually considered in finding the right insurance policies for your business. This would typically be more than one, and you would need to look for policies that would best cater to the needs of your business.
Mitti (by SafetyCulture) is a powerful digital platform used by businesses in evaluating their conformance to best practices and industry standards. Using this tool can also help prevent negative occurrences that may cause a disturbance to operations like claims and lawsuits. Proactively identify potential issues and address them using Mitti (by SafetyCulture), and accomplish the following:
Conduct regular inspections and audits to ensure your business’ compliance with internal policies and industry regulation.
Streamline your inspections by utilizing free public liability templates from the Library.
Upload corresponding media/images directly during the inspection using mobile phones or tablets.
Report any hazard, issue, or non-compliance observed and assign it to the right people
Automatically store records of inspections, issues, and corrective actions through cloud-based recordkeeping.
Safely access your data anytime, anywhere.
Sign up to Mitti (by SafetyCulture) for free.
Further safeguard your business by utilizing Mitti (by SafetyCulture) along with Mitti, a business insurance company that pairs insurance and inspections to mitigate possible setbacks, incidents, or mishaps in operations. It can help maximize your business’ potential through risk and safety ratings and insights, remote insurance surveys, and digital inspections that raise the quality standards of your business.
See how Davies Chocolates, an Australian-based chocolate manufacturer, uses Mitti (by SafetyCulture) and Mitti to manage business risks and promote insurance transparency.
Use this template to assess your business’ compliance to best practices in preventing injuries and incidents. Regularly conduct inspections and reviews using this checklist to ensure that employees are well-trained and updated with the latest changes in business procedures.
This template helps manage and reduce the chance of risk during a significant process change by identifying common areas needed to be checked. It also evaluates if relevant people are properly notified of the changes, and confirms if risk assessments are performed before implementing the changes.
