What does liability insurance cover?
If you operate a haulage business, the need for HGV insurance for the trucks and lorries you use is probably second nature – after all, motor insurance is required by law and you are likely to want full financial protection for your lorry or fleet.
Liability insurance, however, is a form of protection you might not have considered – there is no legal obligation to have it, yet it safeguards you and your business against potentially crippling claims.
You may also find that some of the companies you have contracts with may require you to have an appropriate level of liability insurance.
Public liability claims
In the operation of your business you owe a duty of care to customers, visitors to your premises and members of the public. If any one of these suffers a personal injury or has their property damaged as a result of your negligence in exercising that duty of care, they may claim compensation.
It is a duty of care owed not only by you personally but also by any employees of your business.
Even with you and your employees taking the greatest of care in the work you do, accidents may happen and a member of the public, one of your customers or a visitor to your site might get hurt or have their property damaged. If you are held at all to blame, you may be ordered to pay compensation.
Given the seriousness and potentially long-lasting effects of personal injuries, these types of public liability claims commonly assume very significant sums in compensation.
Public liability insurance
Liability insurance is designed to indemnify you against such claims and, in recognition of the large sums that might be involved, that indemnity typically offers cover of a minimum £1 million – although double this amount, or even more, is by no means uncommon.
Although you may be under no legal compulsion to have public liability insurance, there are three very compelling reasons for doing so:
- without it, you may end up facing a very substantial demand for compensation in the event of a claim – possibly leading to the financial collapse of your entire business;
- it typically covers the cost of legal fees and expenses in defending allegations of negligence and the claims that follow; and
- potential customers might insist that adequate cover is in place before awarding your company their business.
The cover might be included as one element of your wider HGV insurance, but you may also choose to arrange it quite separately, on an entirely standalone basis.
Although this liability insurance indemnifies you against claims made by members of the public, customers, visitors to your premises or anyone else affected by the manner in which your business is conducted, it is important to remember that it offers no protection against claims that might be made by your employees if they are injured, fall ill or have their property damaged whilst working for you.
Indemnity for claims made by your employees is provided by employers’ liability insurance and the law requires that you have a minimum of £5 million to ensure that you meet any such claim. You face a stiff financial penalty if you have employees but do not have this insurance cover.