Does your business have protection against claims by people that may be injured, or who may have property damaged due to the actions or inactions of the business? The people exposed to such injury or damage includes customers, vendors or the public at large. If a business acts in a negligent, reckless or irresponsible manner, it (and it’s owners) can be found liable for these injuries or damages. Public liability insurance coverage will protect the business assets in a case such as this.
As compared to the protection afforded by a public liability insurance policy, the cost is very low. Millions of dollars of coverage can often be purchased at a fraction of that cost. The fee to purchase insurance is called the premium and several factors govern the size of a premium to include the size and type of business, it annual gross revenue, the number of employees, and the territory of the business.
In addition to the liability protection afforded by these policies, an insured is also provided a full legal defense. This cost is over and above any damages that may be paid for a claim and is usually not deducted from the liability limits. In return for this benefit, the insurance company retains the ability to settle or defend a case as they see fit. An insured generally cannot dictate to the insurance company how they should defend a case or whether a case should be settled.
Public liability coverage is available to business owners either through a policy that only provides liability coverage or through a package policy that includes liability coverage with other important coverage like building and business personal property coverage.
Liability claims can arise out of business operations, or completed operations. In one case, an accident could occur at the insured’s place of business. In the latter, damage could be caused by work that the insured conducted on a customer’s premises.
Product liability claims arise out of the manufacture and sale of an insured’s products. One only needs to examine a history of the automobile industry for examples of such cases.
Professionals need to have special coverage for errors and omissions that may cause harm to others. This coverage is usually available by endorsement to an existing policy, or through a stand-alone professional liability policy. Typically, a general liability policy will not cover this exposure.
As a business owner, one of the most important insurance decisions you will face is the amount of public liability insurance to purchase. It is impossible to see into the future and is therefore impossible to calculate the exact amount of claims that may be headed your way. The best rule of thumb is to always deal with a qualified insurance agent or broker that has experience in your industry, and to always purchase as much insurance as you can reasonably afford.