Wednesday, September 28, 2022

How SMEs Deal With Insurance and Liabilities

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Small and medium enterprises (SMEs) are the backbone of the economy. These companies provide a lot of jobs, but they are often under pressure to keep costs down. 

For this reason, they usually go without basic insurance cover that they need to protect themselves and their employees against unforeseen incidents that could lead to costly legal cases or fines. 

One such type of insurance is public liability insurance, which protects your company from any damage caused by an accident involving one of your employees or customers.

What is Public Liability Insurance?

Public liability insurance is a type of insurance that protects you against any legal action taken against you by a third party. If someone is injured in your business premises or by something produced by your business (such as food), they can file a claim against your public liability policy and make a successful claim for damages.

If you’re an SME, it’s especially important to have good public liability cover in place. This type of insurance covers any claims made by customers or clients that are not covered by other types of commercial insurance, such as product liability or professional indemnity policies.

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Also Read: Thinking of Pursuing a Career in Public Health?

Types of Public Liability Insurance

Liability insurance covers the legal costs of defending claims and even the cost of settling it—but only if you have purchased the right level of coverage.

The first type, called general liability (also known as all risks), pays for all types of losses that may be caused by your business. 

General liability can be broken down into two categories:

  • Products liability – This insurance covers injuries resulting from products owned by or sold by an insured party. This type of coverage is often purchased alongside commercial property insurance, which protects against loss or damage to property owned by your business from fire and other events including theft, vandalism, and weather damage.
  • Personal injury protection – This provides financial assistance during lawsuits involving wrongful death or injury caused by someone else’s negligence. It is like having corporate Assurance life insurance.

Each state has laws governing how much each type must cover; some require employers to purchase them while others don’t mandate their use at all.

Also Read: At What Age Should I Purchase Life Insurance?

Products Liability Insurance

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If you manufacture or sell products, you may need product liability insurance. This type of insurance protects you against claims made by people who have been injured by your products. 

The policy can be combined with commercial general liability insurance to cover both the cost of defending against lawsuits and the costs associated with paying damages when a court rules in favor of the plaintiff.

Professional Indemnity Insurance

Professional indemnity insurance, or PI Insurance for short, is where a business pays an annual premium to an insurer in return for protection against losses incurred as a result of negligence.

Examples of businesses that need PI insurance include accountants, lawyers, and other professionals such as doctors, dentists, and veterinarians.

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The benefit of having this type of policy is that it protects the business from paying out huge sums in compensation if they are found negligent in their work and someone else suffers a financial loss. In addition to this, most insurers will also offer legal advice and representation should you ever need it.

There are two main types of professional indemnity policy: public liability cover (protecting against injury caused by faulty products or services) and professional errors and omissions cover (protecting against mistakes made while performing contracted duties).

How to Choose the Right Public Liability Insurance Policy?

There are many things to consider when choosing a public liability insurance policy. First, you should make sure it covers your business activities. For example, if you run an electrical contracting business and subcontract work out to other tradesmen, then the public liability insurance policy should cover them too (unless they have their own). 

You should also make sure that the policy covers all of your premises, including offices and warehouses. This can help reduce costs and ensure that everything is covered in case something happens at either place.

Second, consider whether or not it covers any employees or contractors on-site who may be injured as part of their duties. If someone slips on a wet floor and breaks their leg while working at one of your properties, then there could be potential liability issues if they decide to pursue legal action against the company responsible (you!). 

A good way around this is by ensuring all staff members are aware of possible hazards before they start work so they’re less likely to get hurt. Plus it helps prevent accidents from happening in the first place!

Finally, check whether there are any exclusions listed within each clause, which might cause problems later down the line if anything goes wrong with regards to product manufacturing processes or specific products sold online through websites such as Amazon Marketplace. These items need careful thought when selecting which type of cover would be best suited

What Are Some of the Things You Should Be Aware of When Buying Public Liability Insurance?

When you’re thinking about buying public liability insurance, it can be hard to know what to look out for. This section will explain what types of things are covered by a public liability policy and how they differ from other types of insurance policies.

  • What does public liability insurance cover?

Public liability insurance is an important part of protecting your business against claims of negligence and mistakes that could lead to injury or property damage. 

Most standard business insurance packages include public liability cover. But if yours doesn’t, then it’s worth considering adding this into your package as an additional layer of protection.

  • What is the difference between a product and public liability?

Product liability is an extra layer added to some basic business insurance packages that protect you against any claims resulting from faulty products. It covers any costs associated with injuries caused by defective goods. 

  • What’s the difference between Professional Indemnity Insurance (PII) and Product Liability Insurance (PLI)?

While PII might sound like PLI on paper, they actually work very differently. While PII protects professionals like solicitors or accountants from being sued over their advice/services, PLI provides coverage for damages caused directly by faulty products/goods sold online or offline (such as clothes bought through social media platforms).

Public Liability Is an Important Type of Business Insurance for SMEs

Public liability is an important type of business insurance for SMEs. For example, if a customer slips and falls on your premises and claims damages, public liability will cover the cost of any legal action and pay out damages. 

Public liability also protects you against claims resulting from accidents that happen on your premises in which there is no negligence involved (for example, if a customer is injured by falling into an open manhole).

Public liability insurance can be taken out as part of comprehensive or package business insurance policies or purchased separately.

Conclusion

In this article, we have seen how public liability insurance can help SMEs to protect themselves from legal action and financial losses. We also discussed some of the important things you should keep in mind before buying a policy for your business.

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