How liability insurance boosts customer trust?
Here is how liability insurance can help boost customer trust:
- Covers unexpected incidents
Your customers want a risk-free experience when interacting with your business. However, despite your precautions, accidents can happen.
For example, you run a restaurant. One day, a customer arrives who is sensitive to certain ingredients in the food served. After eating, they suffer food poisoning and require immediate hospitalisation. In this scenario, liability insurance kicks in and takes care of the customer's medical bills.
Legal battles are not only stressful but can also be costly. If you are a startup, you may not have the financial bandwidth to handle such crises. Liability insurance assists here by handling lawsuits that your customers file against you.
Suppose you own a construction company. You sold a few units to your high-net-worth client. However, after a few months, your client sues you for property damage caused by an alleged fault in your units. The insurer will pay for the legal fees, settlements, and other associated costs in such a scenario.
- Strengthens business credibility
Customers prefer working with financially secure companies that are prepared to handle potential issues responsibly. For example, if you are a freelance graphic designer, a client might hire you for a big project. However, they may be curious to know if you can compensate them if your work causes them financial loss.
If you have professional liability insurance, clients will see that you are serious about your profession and prepared for unforeseen circumstances. This will boost their trust in your services and increase your chances of securing high-value clients.
- Protects against employee actions
Even with the best training, employees can sometimes make mistakes that affect customers. Liability insurance provides coverage against errors and unintentional negligence.
For example, if you run a salon and a stylist accidentally burns a client’s scalp during a hair treatment, the client may seek compensation for medical expenses. You might have to cover the costs if you lack liability insurance. But with proper coverage, you can take care of the claim financially without damaging your reputation.
Customers appreciate businesses that stand by their commitments and take responsibility for their employees’ actions.
- Reduces negative publicity
Word of mouth and online reviews majorly impact a business’s reputation. A single incident can lead to negative publicity if not handled properly. Liability insurance helps prevent such damage by compensating customers appropriately and avoiding long-term harm to your brand.
Suppose you are a wedding planner, and a couple’s wedding gets delayed due to a logistical error, causing them emotional and financial distress. Your brand reputation may suffer if they take legal action or leave bad reviews. However, if you have liability insurance, you can cover the necessary compensation and turn an unhappy customer into a loyal one.
Many clients and partners require businesses to have liability insurance before signing contracts. This is particularly common in industries like construction, healthcare, and consulting, where the risk of liability is high.
Common exclusions of liability insurance
While liability insurance helps your business in many ways, there are certain conditions under which the policy does not offer coverage. These include:
- Liability insurance won't cover it if you deliberately cause harm or damage. It is meant for accidents, not intentional actions.
- If your actions lead to criminal charges or illegal activities, liability insurance won't cover legal defence or damages from those acts.
- Damage caused by pollution, like environmental contamination, is not covered.
- Claims related to discrimination, wrongful termination, or harassment are usually excluded.
- Damage caused by war, acts of terrorism, or civil unrest is not covered.
- Costs associated with recalling faulty products are not covered by general liability insurance.
Conclusion
Customers are more likely to commit to businesses that show responsibility and preparedness. Investing in liability insurance sends a strong message that you care about your customers’ safety and satisfaction. If you have not already, it is time to invest in liability insurance. Your customers and your business will thank you for it.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.