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What is Liability Insurance?

Be prepared.

Liability Insurance is a type of insurance that covers legal costs and payouts the insured is liable for as a result of claims, injuries, and damage to other people or other people’s property. If the insured is found to be legally responsible for paying these costs, third-party liability insurance can help. If, however, they cause damage or injury intentionally or fail contractual obligations, liability insurance may not cover them.

Types of Liability Insurance 

There are many kinds of liability insurance options for businesses, and what your company needs to cover will determine which options you include in your liability insurance policy.

Public Liability Cover

An important part of any business’ risk management strategy includes public liability insurance. This type of insurance provides cover for instances where members of the public, in particular, bring claims against your company for damages, injuries, or fatalities. There are different forms of public liability insurance available. This type of insurance is valuable for businesses and professionals who interact with members of the public.

Vehicle Third-Party Liability Cover

Third-party liability cover for your company cars or vehicles covers losses, damages, and injuries for other parties in an accident, but not your own losses, damages, or injuries. This type of liability insurance is very affordable, making it an attractive option for companies on a budget.

The business will be covered for costs owed to the other party in an accident, however, their own costs will still need to be paid. The risks of this option sometimes do not outweigh the benefits of third-party vehicle insurance as a standalone option when a company or business is in a tight financial position. Find out more about Motor liability insurance for businesses.

General Liability Cover

Third-party cover for your company? That’s also called general liability cover, and it will protect your company from third-party claims for damages. General (or comprehensive) liability insurance packages can often be customised to suit small-to-medium business enterprises and every other kind of business or organisation. The amount you pay and what the insurer agrees to cover will be influenced by the type of business or organisation you have and how much risk is involved.

The level of customisation available to you will depend on the insurer providing general liability to your company or organisation. Types of liability cover that can be included in your general liability insurance include cover for the costs of lawsuits, property damages, bodily injuries, personal and advertising injuries, medical payments, and operations or premises liabilities. General liability insurance tends not to include punitive damages, but you will need to check the details in your policy.

D & O Liability Cover

The term D&O is an acronym for Directors and Officers. Directors and Officers Liability Insurance protects a company’s board of directors and officers against liabilities. Most D&O Liability Insurance focuses on protecting the company’s directors and officers should the company itself be sued. D&O Insurance is often a measure that goes above the liability and other business insurance already in place in the company.

D&O Liability Insurance is useful for instances where directors or officers may commit an offence or make a mistake, omit valuable information, or act carelessly or lawlessly and put the company in danger. D&O liability can also protect the company should a senior individual at the company put the company in jeopardy.

How can Liability Insurance benefit me & my business?

All businesses need liability cover, but the type of cover you need will depend on your industry, type of business, and how your business operates. A bed-and-breakfast establishment, for example, may need more than just General Liability Cover for cases where guests may get injured. Your level of risk determines your need for liability cover. Think, “What could happen, and how can I prepare if the worst should happen?”

Small and large businesses alike need liability insurance. If your company works with vehicles, you will need third-party vehicle insurance or liability insurance to protect your fleet in case of accidents. If your company works with the public, you will need liability insurance.

Liability cover protects the insured company from the need to pay thousands of rands for damages, injuries, and other liabilities. Liability insurance can benefit your business no matter what size it is.

Get a business insurance quote from us today and get the liability cover your business needs.

Sources: Investopedia;

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