As a busy small-business owner, understanding what insurance policies you might need is something that can easily be pushed to the side. Traditionally, insurance products were hard to understand and access, but nowadays the emergence of comparison tools and online platforms offering simplified solutions helps give business owners quick and easy access to the insurance products they need.
But as a small-business owner, one thing you need to work out before making a purchase is what insurance products do you and your business actually need.
You’ve likely heard of Public & Products Liability Insurance before. It’s a combination of two different types of insurance: public liability insurance and products liability insurance and it aims at working as a safety net to minimise your out-of-pocket expenses, in paying legal bills, responding to or settling a dispute.
In this article, we’ll look at what Public Liability and Product Liability cover are and why these types of cover might be of relevance to your small business.
Public Liability
Public liability insurance protects you and your business against any liability if someone is injured on your premises or while you are providing your services in Australia, or the world – this may sometimes exclude USA or Canada.
A couple of common examples include:
- Slip, trip, and fall accidents: If your business has a physical location, such as a retail store or a beauty salon, you could be at risk of a claim if someone slips and falls on your premises. For instance, if you mop your shop floor but forget to put out the wet floor signs and a customer walks through and slips over as a result, there is a possibility that the customer will seek legal action against your business.
- Property damage: If your business operates off-premise in the homes or businesses of your clients and there is any damage made to those locations, you may be liable for the damage caused. For instance, if you’re a home organisation business and you’re working in a client’s home and accidentally knock over an expensive family heirloom as you enter the lounge, there is a possibility that the customer will sue you for this damage.
In both of these instances, having public liability insurance would cover the cost of defending yourself and any compensation awarded to the customer if you’re found liable.
Products Liability
Products Liability insurance protects you for claims made against your business for any products sold or supplied by you to a third party.
- Faulty product: This might be a claim arising from a faulty product that injured someone else. For example, if you have a small business that sells outdoor furniture. If for instance you sold a faulty chair that collapsed while a customer was sitting on it and injured themselves using your product, they might look to make a claim against you.
- Error of judgement: A customer is in your shop with their three-year-old child. The child is throwing a tantrum, so you give them a toy to play with. The toy is rated 12+ and you didn’t realise. The child swallows a piece and needs surgery to get it out.
Having products liability insurance would cover the cost of defending yourself and any compensation awarded to the customer if you’re found liable.
With any insurance purchase for your business, it’s important that you spend the time to work out what could go wrong within your business to help determine what type of cover you need. Having the right protection will give you peace of mind and can help protect you when accidents occur.
