What is Public Liability Insurance?
Public liability insurance cover is designed to ensure that, should a person become injured, or their property damaged through negligent actions by you or your business, they will be adequately compensated. This is described in policy wordings as 3rd party property damage and 3rd party injury.
For example: You are a roofing contractor, and one day, whilst working on somebody’s roof, you slip and drop a tile on a passerby causing them injury. This is called 3rd part injury.
The 3rd party is someone who is not connected to the business. This could be a member of the public, or a customer.
So liability insurance will cover my business if property is damaged or people are hurt? Yes and no, there are several caveats to this. Although liability insurance provides cover for negligent actions, there are a couple of common endorsements you need to be aware of.
Firstly, it is assumed you are competent at your trade, and as a result, cover will not extend to any item you are working on, or to any defective workmanship. This helps keep policy premiums down to manageable levels, but what does this actually mean? Well, if you were a bathroom fitter working on a toilet and happened to drop your hammer through the bath, then the bath would be covered, but, if you dropped the hammer into the toilet and damaged that, you wouldn’t be, because this is the item you are actually working upon. For certain trades a policy will also specify conditions that have to be worked to, in order for any claim to be met. For instance: trades such as plumbers or heating engineers, who may use blow torches or other heat producing tools as part of their business, may have to work to conditions that specify certain fire precautions, for obvious reasons. Provided these are kept to, a claim is less likely to happen, and more likely to be paid if it does occur.
Secondly, it only covers actions that are negligent. Unfortunately, accidents do happen from time to time where no-one is at fault. In the event that an accident does happen, and the insured can show they took all reasonable and foreseeable precautions in their work, then it might be very difficult to prove they have been negligent in any way, and a liability claim would therefore be turned down. This does not mean the policyholder would be left high and dry, but that the insurance company would defend any legal action on behalf of the insured.
However, having a liability insurance policy that protects you against negligence, is not a licence to go daft. As mentioned in the previous paragraph, a policyholder might not be held negligent for an incident if they had taken “all reasonable and foreseeable precautions”, and the majority of liability policies will have this phrase, or something similar incorporated into their wording. After all, any insurance policy is never a “catch all” device, and shouldn’t be treated as such. Regardless of this, insurance cover for liability still represents very good value, especially when you take into account how much litigation occurs in today’s society, and the large sums negligence claims can rise to.
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