Aside from Employers’ Liability, there are a number of different liability insurance products designed to protect a business. These include:
Public Liability Insurance
Product Liability Insurance
Professional Indemnity Insurance
Directors and Officers Insurance
Environmental Liability Insurance
Legal Expenses Insurance
Public Liability Insurance covers the financial cost of compensation to members of the public (anyone who isn’t your employee) for death, injury or damage to their property that occurs as a result of your or your employees’ negligence. This involves members of the public who visit your business, take part in your activities or watch activities you have organised.
Product Liability Insurance covers the cost of compensation to anyone who is injured, or whose property is damaged, as a result of a fault in a product you design, manufacture or supply.
Professional Indemnity Insurance covers the cost of compensation to clients if your professional advice has caused them to lose money. This is type of insurance is particularly advisable for professionals such as solicitors, accountants, financial advisers, architects and surveyors.
Directors and Officers (D&O) Insurance covers you for the cost of compensation in instances where a claim is made by a customer against one of your business directors, or other member of staff.
Environmental Liability Insurance is recommended if your business causes damage to water, land, protected plants and animals, or protected plant and animal habitats, as it covers the cost of bringing about adequate repairs.
Legal Expenses Insurance covers the cost of legal action taken in defending your business in instances where legal action is not covered by your liability insurance e.g. an employment tribunal.
Employer Liability Insurance is a legal requirement if your business has employees. This insurance provides financial cover for employee’s injured at work or who become ill as a result of the work they do for you. This insurance covers the cost of compensation to a claimant and legal fees.
This type of insurance policy needs to cover not only all conventional staff, but also contract, casual, seasonal and temporary staff.
Legally you are required to have at least £5m cover in place, otherwise you could be fined up to £2,500 for each day you fail to have appropriate insurance in place.
Buildings Insurance covers damage to your business buildings. This damage might occur because of fire, floods, water damage, lightening strikes and earthquakes.
The amount of buildings insurance taken out should cover the cost of rebuilding your business premises and include professional fees and the cost of clearing the site.
Contents Insurance covers the contents of your building including damage to and/or theft of any stock or business equipment.
Stock should be covered for cost price (the price without profit) and may needs to account for stock fluctuation at certain times of the year. For example, more stock being present on site just before Christmas.
Business equipment can be insured on ‘indemnity’ (where wear and tear is taken into account when settling claims), or ‘replacement’ (where stolen, damaged or irreparable items are replaced with a new one).
Liability Insurance protects you against risk of compensation claims and legal action from your customers and the general public, when you or your employees have done something wrong, failed to do something you should have, or broken the law.
Buildings and Contents Insurance provides financial protection for your property, stock and business equipment from events such as burglary, fire or flooding.
Business Interruption Insurance is a further level of protection which provides financial assistance for the period when you are unable to conduct business as normal because of this damage. E.g. cafes, hotels or shops that have to close whilst repairs are undertaken as a result of a flood.
If your business has employees, you are legally required to have Employer’s Liability Insurance
Employer’s Liability Insurance covers you if an employee is injured at work, or becomes ill as a consequence of the work they do for you. By law your insurance must cover at least £5m.
A business uses motor vehicles it is legally required to have Third Party Motor insurance. This type of insurance covers damage to persons and property as a result of a collision caused by either you or your employee. This insurance must cover at least £1m for damage to property and an unlimited amount for personal injury.
Specific policies are recommended where a motor vehicle forms a core part of your business, for example taxis, coaches, farm or construction vehicles.
Every business needs insurance to protect itself from a wide range of risks it faces every day. Insurance allows you to put in place system to control these risks and stop them from becoming serious setbacks.
If and when problems do arise, by having insurance in place you have the financial assistance to continue doing business and get back up an running again through replacement, repair or reinstatement.
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