A simple definition of liability insurance is cover to protect a buyer from liabilities brought on by claims and lawsuits. This type of insurance usually includes employers liability, which is sometimes optional, public liability and product liability. Any tradesman running a business should have liability insurance because of the risks involved. Without liability cover, a business could face devastating claims from the public and employees that could literally put a company out of business. Liability insurance usually provides protection for the insured party against most claims submitted by a third party. Payments, if applicable are generally awarded to the third party and not the insured. When a claim is made, the insurer has an obligation to defend a client.
How Liability Insurance Cover Helps
A premium is set by an insurer to cover a business. This price depends on several factors including the type of business. An insurer will usually charge a book or average rate for businesses that are small to medium, and set a fee that is related to claims paid for similar services. This rate is usually used to figure the premium, which is reflected by the amount of business the company is engaged in. If an employer has employees, the insurer will usually use a payroll to determine the activity, whilst public and product liability is generally determined by turnover. In many cases, an insurer might adjust a premium based on claims records, risk management, etc. The end result could either reflect a reduction or increase in premiums, depending on how well or how poorly an employer performs.
Employers' Liability Insurance
Employers' liability insurance usually allows a company to cover costs
for legal fees and damages for employees who become ill at work or
injured whilst at work because of the employer. If negligence on the
part of the employer is the case, an employee will often seek
compensation. In the UK, an employer must have employers' liability
insurance cover at a minimum of £5 million. Most UK insurers provide at
least £10 million.
Any business that has customers or members of the public coming and
going from the site usually have public liability cover. This insurance
will usually protect a business owner from any damages caused by them to
a third party or to their property. It will also likely cover costs,
expenses and legal fees incurred. Premiums for public liability are
usually figured by defining the business and on estimates for activity
levels of the company.
An owner of a business is legally responsible for damages or injuries
caused by a product he or she supplied. A product can be defined as a
physical item sold or given away. This product must be fit for purpose,
and should a faulty product be sold or given away, a claim can be filed
against the owner, whether he or she manufactured it or not. Conditions
that apply for a faulty product provided by an owner include a
businesses' name on a product, repairs or changes to the product by a
business, a manufacturer can't be identified, a manufacturer has halted
business, or an owner imported a product was imported from outside the
European Union. If these terms do not apply, the manufacture or
processor is liable if you can prove:
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