Small Business Liability Insurance
Post date: January 31st, 2009 |
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What a thoroughly confusing subject !. We have a huge variety of products labelled public liability insurance, employers liability insurance and quite a few other “flavours” of liability insurance. There’s even more confusion concerning what is optional and what what the laws of the land insist upon. This article is intended to clarify this type of insurance so that we are all able to purchase a product to fit our needs and safeguard the business against claims from clients, members of staff or the general public. We’ll begin by talking about the more common types of this version of insurance.
Employers Liability Insurance
An employer is required to look after the health and safety of their employees whilst they are working. Your staff may be harmed at work or your current or former employees, may become ill as a result of their endevours whilst in your employment. They could attempt to sue you for damages if they believe that you have been negligent in your duty to protect their health and safety. The Employers’ Liability (Compulsory Insurance) Act 1969 requires that you hold at least a minimum level of insurance protection against any such claims.
Employers’ liability insurance will enable you to pay any compensation that is awarded to injuries or illness to your employee’s whether they happen off or on site. Incidentally, any injury or illness as a result of motor accidents that occur whilst your staff are on company business could be already covered by your motor policy.
The National Health Service might also reclaim hospital treatment costs and ambulance costs whenever personal injury compensation is paid.
Employees suffering injury due to an employer’s negligence can seek compensation even if the business should go into receivership or liquidation.
According to UK law, an employer in the United Kingdom must take out ELCI (Employers Liability Insurance) and have cover of a minimum of £5 million. Most insurers offer cover of at least £10 million. ELCI must provide cover for all your members of staff in England, Scotland, Wales and Northern Ireland.
Should your business not be a limited company, and you are the sole member of staff or your staff consists solely of close family members, you need not purchase employers liability insurance. Limited companies with only one employee, where that employee also owns 50% or more of the shares in the company, are also not required to arrange compulsory Employers Liability Insurance.
Public Liability Insurance
Public Liability Insurance insures against any damages awarded to somebody following damage to their property or an injury that can be blamed on you, your business or your staff. Furthermore it offers cover against any related legal costs and expenses as well as costs of hospital treatment (including ambulance costs) that the NHS may try to claim from you.
Premiums depend on your style of business, your turnover and how many members of staff you employ.
Certain businesses, e.g. horse riding establishments, are legally forced to hold public liability insurance. You are also likely to discover that some of your customers or potential customers need proof of you holding public liability insurance before they will allow you to do business with them.
Product Liability Insurance
When discussing PLI (Product Liability Insurance), a product is any physical item that is given away or sold.
According to the Consumer Protection Act of 1987, products have to be “fit for purpose”, customers may attempt to claim from you first, even if you did not manufacture it. You would be liable for compensation claims if:
- your company name is on the item – ie the manufacturer made it for your brand
- your business repairs, refurbishes or otherwise modifies it
- you imported it from outside the European Union
- you cannot clearly identify the manufacturer
- the manufacturer is no longer in business
If none of the above applies, the manufacturer is liable – or the processor in the case of the item being manufactured from parts made by multiple suppliers.
Property Owners Liability Insurance
Property owners’ liability insurance is designed to pay any damages and costs awarded to a member of the public if they be injured following an accident on, or linked to, your premises. This will include the cost of hospital treatment and ambulance charges charged by the National Health Service, if someone is awarded personal injury compensation.
Generally, it is a good idea to make sure that property owners’ liability is included in your business insurance – you might find it included with your contents insurance policy.
Professional Indemnity Insurance
If your business involves selling your skills or knowledge, you might want to think about taking out professional indemnity insurance.
The product covers your business against compensation claims brought by a client if you have made errors or are deemed to have been negligent in some or all of the services that you provide for them. Professional indemnity insurance also covers you for any legal costs incurred.
Most professionals have professional indemnity insurance in place. If you are a lawyer, accountant or financial adviser, then you must have professional indemnity insurance. Professionals such as architects, consultants, advertising and PR agencies, and designers often choose to take out such cover also.
Business Insurance
Many owners of small businesses or self employed tradesmen will find that there are liability insurance products designed for their particular trade. These products are marketed under a number of names such as business insurance, small business insurance, tradesmans insurance or self employed liability insurance. These offerings will normally include a variety of individual sections including public and employers liability, combined with appropriate sections from office insurance, professional indemnity and legal expenses. A business insurance policy should offer considerable savings when compared to buying the separate components.