Liga Asuransi – Dear readers, how are you? May your business be more advanced and successful.
Let’s continue our discussion about Risk Management and Insurance, this time we will be discussing public liability insurance or legal liability insurance against third parties.
As we know lately more and more accidents happen that cause injury, defects, deaths, and damage to goods.
Unfortunately, the accident happened caused by another party who had nothing to do with the victim or with the company. As a result, the person who caused the accident was held responsible for the consequences of his mistakes and omissions that had caused the accident to occur.
Well, as an insurance broker and consultant we would like to discuss more this issue so that you understand more and take appropriate action.
If you are interested in this article, please share it with your colleagues so that they also understand you.
Why do I need Public Liability Insurance?
if an accident happens on your premises, or something goes wrong out on site, do you have adequate protection against a claim?
Having adequate Public Liability Insurance can help cover your business from the unintended and unexpected.
Public liability is a duty of care that businesses or property owners have to the public. And businesses may be liable for any injury that a person sustains on their property or because of everyday business operations.
Cover your business with Public Liability Insurance
Public Liability Insurance policies usually cover anyone you interact with as part of your business, except for employees.
Regardless of whether you have a legal obligation to hold a Public Liability Insurance policy or not, many industries and businesses have some form of liability cover, especially those in the trade, construction, and retail sectors, because of their heightened interaction with members of the public.
Public Liability Insurance can be useful for any business that interacts with the public, either directly or indirectly, including subcontractors and sole traders. For example, you might consider public liability for:
- Tradies
- Retailers
- Professionals
- Café owners and restaurateurs.
It may also be beneficial for a business if they’re looking to take on more work and bigger contracts from governmental and public organizations. Without it, businesses might risk losing lucrative contracts – as sometimes clients require proof of insurance.
What happens if you don’t have Public Liability Insurance?
As a business owner or contractor, you will have lots of different responsibilities and it’s easy to put your public liability obligations aside.
However, if an accident does happen in your workplace, and you’re not prepared, you might incur significant expenses.
It may only take one minor accident and claim, and you could be significantly out of pocket. It’s when the worst happens that you want to know you’re covered, not just think you are.
What Is Liability Insurance?
The term liability insurance refers to an insurance product that provides an insured party with protection against claims resulting from injuries and damage to other people or property. Liability insurance policies cover any legal costs and payouts an insured party is responsible for if they are found legally liable.
In summary:
- Liability insurance covers legal costs and payouts for which the insured party would be found liable.
- Liability insurance is often required for automotive insurance policies, product manufacturers, and anyone who practices medicine or law.
- Liability insurance provides protection against claims resulting from injuries and damage to people and/or property.
- Personal liability, workers’ compensation, and commercial liability are types of liability insurance.
- Provisions not covered include Intentional damage, contractual liabilities, and criminal prosecution.
How does Liability Insurance Work?
Liability insurance is critical for those who are liable and at fault for injuries sustained by other people or if the insured party damages someone else’s property.
As such, liability insurance is also called third-party insurance. Liability insurance does not cover intentional or criminal acts even if the insured party is found legally responsible.
Liability insurance is also called third-party insurance.
A product manufacturer may purchase product liability insurance to cover them if a product is faulty and causes damage to the purchasers or another third party.
Business owners may purchase liability insurance that covers them if an employee is injured during business operations.
The decisions doctors and surgeons make while on the job also require liability insurance policies.
Special Considerations
The cost of an additional insurance policy doesn’t appeal to everyone, although most carriers offer reduced rates for bundled coverage packages.
Personal liability insurance is considered a secondary policy and may require policyholders to carry certain limits on their home and auto policies, which may result in additional expenses.
Although commercial general liability insurance protects against most legal hassles, it doesn’t protect directors and officers from being sued, and it doesn’t protect the insured against errors and omissions. Companies require special policies for these cases including:
Errors and Omissions Liability Insurance (E&O)
An errors and omissions liability insurance policy covers lawsuits arising from negligent professional services or failing to perform professional duties.
An E&O policy does not cover criminal prosecution, fraudulent or dishonest acts, or claims against bodily injury. The insured, however, is covered for attorney fees, court costs, and any settlements up to the amount specified by the insurance contract.
Lawyers, accountants, architects, engineers, or any business providing a service to a client for a fee should purchase this form of insurance.
Directors and Officers (D&O) Insurance
This type of policy protects directors and officers of large companies against legal judgments and costs arising from unlawful acts, erroneous investment decisions, failure to maintain the property, releasing confidential information, hiring, and firing decisions, conflicts of interest, gross negligence, and other errors.
Types of Liability Insurance
Business owners are exposed to a range of liabilities, any of which can subject their assets to substantial claims. All business owners need to have an asset protection plan in place that’s built around available liability insurance coverage.
The main types of liability insurance:
Employer’s liability and workers’ compensation
Employer’s liability and workers’ compensation are mandatory coverage for employers which protects the business against liabilities arising from injuries or the death of an employee.
Product liability insurance
Product liability insurance is for businesses that manufacture products for sale on the general market. Product liability insurance protects against lawsuits arising from injury or death caused by their products.
Indemnity insurance
Indemnity insurance provides coverage to protect a business against negligence claims due to financial harm resulting from mistakes or failure to perform.
Director and officer liability
Director and officer liability coverage covers a company’s board of directors or officers against liability if the company should be sued.
Some companies provide additional protection to their executive team even though corporations generally provide some degree of personal protection to their employees.
Umbrella liability
Umbrella liability policies are personal liability policies designed to protect against catastrophic losses. Coverage generally kicks in when the liability limits of other insurance are reached.
An umbrella insurance policy is additional liability insurance coverage that is purchased and goes beyond the dollar limits of the insured’s existing homeowners, auto, or watercraft insurance.
Commercial Liability
Commercial liability insurance is a standard commercial general liability policy also known as comprehensive general liability insurance.
It provides insurance coverage for lawsuits arising from injury to employees and the public, property damage caused by an employee, as well as injuries suffered by the negligent action of employees.
Comprehensive general liability
Comprehensive general liability policies are tailor-made for any small or large business, partnership or joint venture business, corporation or association, organization, or even a newly acquired business.
How Does Personal Liability Insurance Differ from Business Liability Insurance?
Personal liability insurance covers individuals against claims resulting from injuries or damage to other people or property experienced on the insured’s property or because of the insured’s actions.
Business liability insurance instead protects the financial interests of companies and business owners from lawsuits or damages resulting from similar accidents but also extends to product defects, recalls, and so on.
When Is Liability Insurance Needed?
As a business owner, you may be wondering, “How much liability insurance do I need?” General liability insurance is essential coverage that many businesses need because it helps protect them from certain lawsuits and risks that can come up during normal operations.
This coverage, also known as commercial general liability insurance or business liability insurance, helps cover claims that your business caused:
- Bodily injury, such as a customer getting hurt after slipping and falling in your store
- Property damage to someone else’s belongings
- Personal injuries, like libel or slander
If you don’t have liability insurance coverage, you risk having to pay for these kinds of claims out of pocket. Lawsuits can put you out of business, which highlights the importance of liability insurance for your business. It can help protect you so you can focus on running a successful business.
Most businesses need general liability coverage. Sometimes, other businesses or organizations require your business to have this insurance. This can include when your business:
- Applies for a professional license
- How Much Liability Insurance Do I Need?
- Leases office space
- Signs contracts with other companies or clients
How much liability insurance do I need?
You can use a few key questions to help determine how much liability insurance your business needs. These include:
- How many employees do you have?
- Is liability coverage required?
- What are your state requirements for insurance?
- What Is Required of a Business That Applies for Liability Insurance?
- What type of business do you have?
- What types of coverage are essential for your liability insurance policy?
- Where is your business located?
When you get liability insurance, insurance companies will ask for certain information, like your:
- Business type
- Years in operation
- Previous or existing insurance policy
Insurers use this information to examine the amount of risk your business faces. They’ll analyze your history of insurance claims and the type of business you run.
What Is Typically Not Covered by Liability Insurance?
Your business liability insurance doesn’t cover every type of claim. You’ll need other types of insurance to help cover claims of:
Work-related injuries or illnesses that your employees get from their jobs. Workers’ compensation insurance can help pay your employee’s medical bills and give them other benefits to help them recover from a work-related injury or illness.
Property damage to business vehicles sustained in an accident. You’ll need a commercial auto insurance policy to help cover these damages. Be aware that laws vary by state, and you may have to carry a certain amount of bodily injury liability, property damage liability coverage, and personal injury protection (PIP).
Employment-related claims such as sexual harassment, discrimination, or wrongful termination. Employment practices liability insurance can help cover your costs to resolve these kinds of claims.
Mistakes in professional services given to a customer. To help cover this kind of claim, you’ll need professional liability insurance.
These other policies can help you create comprehensive insurance coverage for your company.
How Do You Get Liability Insurance?
In Indonesia, getting Liability insurance
is not easy because there are not many insurance companies that can provide this type of insurance.
The best way to set it up is to use a professional insurance broker who has access to a number of insurance companies.
The broker is also capable of designing insurance terms and conditions that meet your business needs and adapt them to competitive insurance premiums.
One of the best insurance broker companies in Indonesia that can help you is L&G Insurance Broker.
For all your insurance needs, please contact L&G now!
Sources:
- https://www.investopedia.com/terms/l/liability_insurance.asp#:~:text=Liability%20insurance%20provides%20protection%20against,contractual%20liabilities%2C%20and%20criminal%20prosecution.
- https://www.thehartford.com/general-liability-insurance/when-liability-insurance-needed
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