Public Liability Insurance Explained
It is common nowadays for most forms of business insurance contract or ‘public liability package policy’ as they have become known to include a section with cover tailored to the actual trade requested by the customer. Other policy types include; Motor, Engineering, Marine & Aviation. The cost of the public liability insurance is very much governed by the trade and activities of the policyholder and cover is available for almost any occupation even high risk is available. Other factors taken in to consideration before a public liability insurance policy can be prepared are, the wage roll and turnover of the business ( the greater the turnover and wage roll, the more expensive the premium). The markets or countries in which the public liability policyholder is operating and the type of goods supplied ( if any). Details of previous claims and the amount of indemnity required are also needed. Many insurers offer a per capita form of cover without the need for wage roll and turnover and this is usually sold to self employed persons such as Builders, Plumbers, Carpenters etc. In some cases policies can be extended to include tools. Public liability to 3rd parties can occur in a number of ways:-
- Negligence– Liability can arise from an act of negligence if someone acts or fails to act in a certain way. It is up to to the courts to decide what is a reasonable manner. Negligence can occur when a trade’s person is working at a customers home and manages to damage property or perhaps a roofing contractor manages to drop tools on a passer by On a more personal note, individuals can often be the cause of accidents which can lead to a personal claim for injury or damages.
- Nuisance – This can be defined as a wrong doing by unlawfully disturbing a person in the enjoyment of his property. Often Nuisance can be caused by industrial operations and even claims for noise are considered.
- Trespass – is an unlawful act committed with force or violence on the person or property of another.
- Strict Liabilities – these are liabilities that are imposed by law even where the business or individual person could prove reasonable care. In many countries liabilities are regarded as being strict so as the injured party can make a claim without having to prove negligence. In 1987, the consumers protection act introduced strict liability form injuries caused by defective products.
- Statutory Liability – these are liabilities that have been introduced by law, even where the policyholder has exercised care. In the Hotel Industry, Hotel proprietors are responsible for a small amount of guests belongings brought in to the Hotel. The 1956 Hotel Proprietors Act which limits a hotel’s liability for loss, damage or theft from a hotel room to just £50 for one item or £100 for multiple items is often used when guest have their effects stolen from rooms. However, a notice of limited liability has to be displayed and the proprietor could find himself fully responsible for losses if he fails to disclose the necessary notice.
- Contractual Liability – an Individual or business may assume additional liabilities under the terms of a contract negotiated with a Third Party. When requesting a public liability insurance quotation, it is vital that any such contractual liability is disclosed to the underwriters and an agreement obtained that cover will be provided.
The covers applicable are as follows
UK Public Liability Insurance provides protection for either individuals or business against claims from Third Parties caused by bodily injury or disease or damage to their property. It is important to note, that this type of cover will only provide indemnity if the policyholder is legally liable for the occurrence, negligence has to be proved. In many cases accusations prove to be unfounded, the policy will also cover the cost of dense of the claim, costs which can often be expensive. The cover issued in respect of the insured activities as disclosed to the insurance company. It is important that these activities are accurate as failure to provide the correct details may lead to an inaccurate quotation at at worst cover may not be in force. Cover will exclude claims from Employees and property damage may be restricted. Most home insurance polices will also contain a personal liability section, this cover is affordable to individuals not carry our a business for acts of negligence they are liable for. Under a public liability insurance policy, the insurer will provide an indemnity limit, typical limits are between one and five million pounds but for some trade’s higher sums are sought and this type of contract is referred to as an excess of loss contract. These days worried school headteachers and local councils are concerned about the liability they may face in the event a pupil is injured at school and so public liability insurance schools is becoming increasing popular.
UK Employers Liability Insurance is a compulsory insurance, like motor insurance, this type of cover is governed by statute in this case, the Employers’ Liability (Compulsory Insurance) Act 1969. You are responsible for the health and safety of your employees while they are at work. and if any of your employees become injured at work, or they or your former employees become ill as a result of their work while in your employment, you may find they try to claim compensation from you if they believe you are responsible. This type of cover is often referred to as a long tail insurance contract as sometimes it is many years before claims can come to the surface. With this in mind, certificates of employers liability now have to be retained for a period of 40 years. Your insurer will provide you with a certificate of cover each year The Act requires that a certificate of employers liability is displayed at each work premises in a place where it can be seem by employees. The purpose of the Act is to help protect employees from injury or disease in the workplace and as such the definition of an employee is quite wide and can also include volunteers, persons on work experience programs and even members of staff that have been loan from other companies. As an employer, having a well meaning volunteer force can prove to be quite problematic if anything goes wrong. The Act also forbids insurers to withhold claims money from an employee if the policyholder is in breech of policy conditions. This has quite serious consequences for the individual or company as almost certainly the insurance company will want to recover their outlay thus providing accurate information is absolutely vital with this type of cover. In February 2005, the law was changed to remove the requirement for Employers Liability protection cover for directors of limited companies where they are the only employee. The Employers’ Liability (Compulsory Insurance) Act 1969 ensures that you have at least a minimum level of insurance cover against any such claims. The minimum amount required is £5,000,000 but £10,000,000 is the common sum insured provided. It must be remembered that this insurance cover does not extend to include the sale of goods that do not fit their purpose or act and further does not involve injury or damage to property. Under the sale of goods act 1979 you are responsible for any loss suffered by the purchaser of your goods for items that do not fit the purpose for which they were sold or are not of merchantable quality.
Products Liability insurance
Provides cover against liabilities arising out of injuries to third parties or damage to their property caused by goods ;supplied, sold, tested, serviced or repaired. This type of cover is usually an extension of the public liability section of the policy. In respect of establishments selling or preparing food, cover will include food poisoning.
Professional Indemnity insurance
A separate type of liability insurance cover comes under the heading of Professional Indemnity insurance. This type of policy is usually sold on a separate basis from the liabilities mentioned above. This contract is intended to protect individuals or business that act in a professional capacity, offering advice rather than selling goods. Examples of trade’s needing this type of cover are Insurance brokers, solicitors, accountants, doctors, architects etc. The indemnity issued in respect of negligence against the possibility of offering incorrect or misleading advice or just carelessness. In order for a claim to be paid under this type of insurance contract, the person making the claim must be able to prove that the policyholder failed to exercise the reasonable skill and care that could be expected from a member of the profession.