Liability Insurance is a type of insurance that is essential for the protection of you and your business. The different types of Liability can protect against claims involving financial loss, personal injury or property damage that may come from a person, a business, an event a contractor or an employee.
In the midst of embarrassment or awkwardness caused by responsibility for serious accidents, this coverage ensures that the crisis does not become paired with a financial one. Find out about this crucial insurance including what the four types are, who should have it, what it covers and more.
What is Liability Insurance?
This insurance covers you against third party claims of negligence that lead to injury, damage, financial loss or death. In other words, it is extremely useful if any action, property, business or event of yours is alleged to have contributed to, or is responsible for the death, injury, damage or financial loss of another person, a business or their property.
It covers two main financial risks; the legal cost of defending yourself against a claim, and any compensation that is expected to be paid to the third party for injury and damage including to cover their own legal costs where permissible by law.
You may require this insurance to cover a business that may be liable for damage or injury to another person or property, or to cover you for any professional services you may perform that may lead to claims of negligence and subsequent financial loss. You may also require Liability Insurance to protect you in the event of any products that you sell or distribute leading to damage or injury of a customer, another business or person.
The 4 Types of Liability Insurance
This form of insurance is generally available in four types:
Public Liability cover specifically protects you and your business against any claims of injury or property damage by a third party that arises as a result of your negligence. A third party may include a customer, supplier or member of the public.
Some circumstances, for example, may involve faulty machinery leading to an incident, someone tripping on something on business property and injuring themselves, or a worker when working with a customer accidentally damaging the customer’s property.
Professional Indemnity Insurance should be taken out if a business offers any form of advice or consulting services for customers.
This insures your business for any financial consequences in situations where errors or omissions in your advice or recommendations has caused a financial loss or inconvenience for the customer.
Products Liability cover is crucial under Australian Consumer Law for all manufacturers or importers that supply consumer goods in trade or commerce, states Product Safety Australia.
Australian Consumer Law states a consumer can seek compensation from a manufacturer who has supplied a product that was responsible for loss or damage. This policy can protect businesses against these claims or allegations of loss or damage due to their product.
Management Liability Insurance
This insurance policy defends businesses against loss due to illegal, unethical management practices or mismanagement from managers or directors. It covers claims made against the company, as well as against directors and officers. These claims could come from customers, clients, shareholders or even staff under the Employment Practices Liability section of a Management Liability Policy which responds to claims of unfair dismissal, bullying and harassment. Management Liability Insurance is important for a big or small business to preserve against liability claims and provide an effective defence mechanism to any claim whether actual or alleged.
Who needs it?
This type of insurance is most commonly used by businesses, but can also be useful for cover in home and contents insurance. Public and Products Liability Insurance is essential for companies who deal with customers who sell, supply or deliver products, while Professional Indemnity cover is necessary for all companies where an element of advice forms part of the service offering.
Sole traders may also require Public or Products Liability cover, as well as Professional Indemnity cover.
What does it cover?
Liability Insurance will cover the legal cost of defending a claim, as well as any compensation for the injured or wronged, and their own legal costs. It can cover those who may have been acting on behalf of the business at the time of the incident, any loss or damage, first aid expenses or injury to others.
What doesn’t it cover?
This type of insurance does not cover your business’s employees. To protect your employees, Worker’s Compensation Insurance is another necessary form of insurance that means you are covered for any injury, death, loss or damage that is caused to an employee by your business.
This insurance also will not cover business activity that is unlawful, or deliberate acts that have purposefully caused damage or loss.
How much does it cost?
Liability cover can cost from $300 a year to thousands of dollars a year, and will vary depending on what type of business you have, business size or whether the work area is classified as high risk.
To find out more about how much your Liability cover may cost, contact Atlantic Insurance for a quote.
Liability Insurance at Atlantic Insurance
If you require Liability cover for your business, at Atlantic Insurance we offer competitive, comprehensive policies. Our tailored advice and risk management knowledge will ensure you select the right insurance types for your needs, with a team of Client Managers that are experienced in providing cover for small, medium and large businesses from a range of industries.
Any information contained on this page of the website is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Your should consider these, having regard to the appropriateness of this advice and the relevant Product Disclosure Statement (‘PDS’), Target Market Determination (‘TMD’) and Financial Services Guide (‘FSG’), which will be provided following any formal recommendation to you.