What is public liability insurance?

Public liability insurance is a crucial form of business insurance that covers claims arising from injuries or damages to third parties due to a business’s operations. It helps protect businesses from financial losses when customers, clients or visitors file lawsuits for injuries or property damage. The policy covers legal expenses, medical costs and compensation, ensuring the business continues to operate smoothly despite unexpected events.

This type of insurance is essential for businesses that frequently interact with the public, such as retailers, restaurants, event organisers, construction companies and service providers. Any business that welcomes customers, suppliers or other visitors to its premises should consider investing in public liability insurance.

Why is public liability insurance important?

Here is why this type of cover is necessary:

1. Protection against legal claims: A single lawsuit can lead to massive financial losses for a business. public liability insurance ensures that businesses do not have to bear these costs alone.
2. Covers medical expenses: If a customer gets injured on business premises, the policy covers medical costs, reducing the financial burden on the business.
3. Maintains business reputation: Handling customer accidents professionally with adequate insurance in place can enhance a company’s reputation and reliability.
4. Required for business contracts: Many clients and business partners often mandate public liability insurance before finalising agreements.
5. Ensures business continuity: Unforeseen accidents can disrupt operations. Insurance allows businesses to continue functioning without major financial setbacks.

What does public liability insurance cover?

Public liability insurance provides coverage for the following:

1. Bodily injury claims: If a customer, visitor, or passerby is injured due to business operations, the insurance covers their medical expenses and potential compensation.
2. Property damage claims: If business activities cause damage to a third party’s property, the policy covers repair or replacement costs.
3. Legal fees: Legal battles can be expensive. This insurance covers lawyer fees, court costs and settlement expenses.
4. Compensation costs: If the court awards compensation to the injured party, the policy ensures the business does not bear the financial burden alone.
5. Accidental death: If an accident results in a fatality, the insurance helps cover compensation to the deceased person’s family.

Common situations where public liability insurance is useful

1. Slip and fall incidents: If a customer slips on a wet floor in a store and suffers a fracture, the insurance covers medical expenses and any legal claims.
2. Food contamination cases: If a restaurant serves tainted food that leads to customer illness, public liability insurance covers medical bills and legal expenses.
3. Product liability claims: If a defective product sold by a business injures a customer, the insurance covers legal claims and any potential compensation.

How to choose the right public liability insurance?

Selecting the right coverage depends on several factors, like:

1. Assess business risks: Identify the level of risk involved in daily operations.
2. Check coverage limits: Ensure the policy covers potential claims adequately.
3. Compare policies: Different insurers offer varied coverage; compare before purchasing.
4. Understand exclusions: Review what is not covered under the policy to avoid surprises during claims.
5. Consider industry-specific requirements: Some industries require specific liability coverages by law.
6. Evaluate premium costs: Choose a policy that offers adequate coverage at a reasonable premium.

What is not covered under public liability insurance?

While public liability insurance offers extensive coverage, certain exclusions apply. These are:

• Employee injuries: These are covered under workers' compensation insurance.
• Intentional damage: Any deliberate harm caused by the business or employees is not covered.
• Professional errors: Claims related to professional negligence require professional liability insurance.

How to file a claim?

1. Notify the insurer: Report the incident as soon as it occurs.
2. Gather evidence: Collect photos, videos and witness statements.
3. Submit documentation: Provide medical reports, property damage estimates and police reports, if applicable.
4. Work with the insurer: Cooperate with the claims adjuster for smooth processing.
5. Receive compensation: Once the claim is verified, the insurer disburses the funds.

Conclusion

Accidents can happen at any time, and businesses must be prepared to handle them financially. Public liability insurance is essential to ensure businesses do not face financial losses due to third-party injuries or property damage. Without this coverage, companies may struggle with legal battles and compensation claims that can drain resources.

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.