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30 November 2020

Jargon-busting liability insurance

Liability insurance plans offer an indemnity against your civil liability, for damages that may result from injuries or incidents at your premises.

In this post we are jargon-busting, so that you can understand the different liability plans available and establish which type of cover you require.

Is Public Liability Insurance required by law?

Public liability Insurance is not mandatory; however, if your company involves working with members of the public, it should be a consideration.

It will cover:

  • payment of liability or court expenses incurred as a result of any third-party injury
  • damage caused by negligence.

It is your duty to mitigate the likelihood of an accident or injury occurring on-site. Spurious arguments may be defended and usually this will not affect your excess or premium; however, appropriate paperwork and documents are required to evidence that the incident was not your fault.

Do I need Employer’s Liability Insurance?

  •  You are required by law to have a sufficient Employers’ Liability Policy if you employ staff, whether this be contract, casual, flexible or voluntary appointments.
  • If an employee suffers injury or illness at work, he /she could initiate a claim against your company.
  • Having a robust Employers’ Liability plan in place can give you peace of mind that, should you find yourself liable, your company will not have to pay the bill for high-defence expenses or settlements.

Do I need Employer’ Liability as a director?

Employers’ liability is required if you hire any employees or work with ‘work-only’ subcontractors. Even if you have just one director, Employers’ Liability is necessary.

Yet, it is not legally required for the following:

  • self-employed employees
  • unincorporated family businesses
  • if you are the owner of a limited company, do not hire someone else and you own more than 50% of the share capital

What is Liability Insurance for Directors and Officers?

  • If something goes wrong and the corporation is responsible for an accident or injury, the director, partner or officer of the company’s personal assets may be at risk. Directors and Officers Liability cover, also known as Management Liability Insurance, provides financial security for senior business owners.
  • Breach of duty, lack of due diligence, defamation, negligence or health and safety claims may all impact on an individual and the company.
  • Directors and officers could face allegations from other senior businesses, competitors or employees. It is important that you do not personally have to pay costly legal fees and compensation payments.

What is Product Liability Insurance?

  • If anyone is hurt, or their property is harmed as a result of your product, they may bring a claim against you.
  • Even if you are not the manufacturer, if your business name appears on a product, you will be held liable if someone has suffered an injury or illness as a result of that product.
  • You will require Product Liability Insurance if you are importing products outside of the EU for sale in the UK.
  • Both manufacturers and retailers have a duty of care to ensure that the products they sell to customers are safe. Ensure that you provide instructions and alert customers to any potential risks. Take safety concerns seriously and deal with them quickly and effectively.

Does Product Liability Insurance cover design?

  •  Yes. Product Liability Insurance covers you if you design, manufacture, repair or refurbish products.

What is Professional Indemnity? 

  • If you offer a professional service, you can be faced with a negligence lawsuit if your advice or service causes harm to your client. This may include allegations of neglect, defamation, exchange of sensitive information or violation of copyright.
  • Anyone who provides advice or expertise, or handles customer data, may need to consider Professional Compensation. Always ensure that your insurance policy is in order to cover costs from potential claims.

What is the difference between Public Liability and Professional Indemnity? 

  • Public Liability will cover you for any third-party property damage or injury.
  • Professional Indemnity will cover you for mistakes such as bad advice, negligence or professional slip-ups.
  • If you manufacture a product, you will need Product Liability cover instead.

It is important to have the right insurance policies in place to protect your customers, members of the public and employees, whilst also giving total peace of mind to yourself and your business.

For a confidential Due Diligence review or a discussion about how best to protect your business, contact us today and we will be happy to assist.


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