information and advice - public and product
Can you afford to be without it?
businesses are exposed to some degree of risk. The sudden loss of a key
member of staff, for example, could have disastrous consequences as could
damage caused by a fire, long term failure of equipment or loss of property
If your delivery van is put out of use following an accident or your
premises get flooded, imagine how disruptive this would be to the day
to day running of your business. And what if one of your customers is
injured because a product you sold was not wired properly or a member
of staff is hurt in a workplace accident?
This is where insurance comes in. All these eventualities can be insured
against and the impact they have on the long term success of your business
minimised. They are optional, of course, and businesses have to assess
the risks – their likelihood to occur and the damage they could
cause – and decide whether insurance is required.
There are, however, 3 types of business insurance which are essential.
1. Employers liability insurance
All businesses, no matter how small, have a legal obligation to take out
this type of insurance which provides protection should a member of staff
bring a legal case against the firm, for an accident caused in the workplace,
for example. It covers against injury, illness or disease sustained in
the course of a past or present worker’s employment.
2. Public liability insurance
The second main type of insurance that a business needs is public liability
insurance. This is not a legal requirement for all businesses but is mandatory
for ones which offer a product or service to consumers. Public liability
covers the business against injury, illness, death or disease contracted
by anyone, other than an employee, as a result of your business operation.
The cost of public liability insurance varies according to the amount
of cover required and this normally ranges between £1m and £10m
a year. The level of cover required tends to follow specialist trades
and activities and also covers damage to or loss of property as well as
Amounts awarded by the courts can be huge and claims multiple and this
is why taking this cover is crucial.
3. Product liability insurance
This type of insurance covers legal liability to pay damages when a defective
product causes damage or injury or financial hardship. And it’s
not only the manufacturer that needs to take out product liability insurance,
any business that supplies products to another firm or to the public should
If you manufacture, fix or sell goods and they injure anyone or damage
anything as a result of a defect, a court may decide that your business
is liable, even in cases where you are not negligent.
Liability for faulty goods normally lies with the manufacturer but, if
it is no longer trading, responsibility can fall to the supplier. Like
public liability, the courts can award large compensation orders and to
more than one claimant at a time, so getting enough cover is essential.
For businesses that deal in services, professional indemnity cover will
be more suitable. This will cover any action brought about by clients
that have incurred a financial loss as a result of bad or negligent advice
or services they may have received.
Most professional bodies have professional indemnity cover and in some
cases this is compulsory.