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What is Liability Insurance?

Liability Insurance is insurance for liabilities. If you, your company, or one of your employees is found liable for damages, injuries, or even fatalities, liability insurance covers the cost of that liability. These can include legal fees and settlement fees, medical expenses, and costs related to the liability, For example, if one of your employees break a client’s window, the cost of replacing the window would be what you’re liable for and what your liability insurance would cover.

Is Liability Insurance Important for My Business?

Liability insurance isn’t only for broken windows and slippery floors. It’s a huge concept that reaches a large variety of issues, many of which may be relevant to your company. All businesses need liability insurance in some or other form. The trick is knowing what liabilities your company is at risk for and finding a policy or policies that mitigate those risks. Liability claims can easily become very expensive, so having insurance to protect you against these claims is important for every business.

What Liabilities Are Putting My Business at Risk?

With so many varying business types and corporate structures, the risks can be complex and diverse. As each company is different, the liability risks your business may face will be unique in many ways. Still, there are elements that are similar, and in South Africa Insurance Providers offer many unique options to best cater to your unique liability insurance needs. For example, an events management company’s risks will be vastly different to those of an engineering firm. Directors and Officers will need cover that differs from the kind of cover retailers need.

Assess your business’ risk profile to determine which liability insurance types need to form part of your liability insurance. Knowing what you need to cover will help you determine which insurance provider and insurance policy best suits your needs. Here are some of the types of liability insurance you can find for businesses in South Africa.

8 Types of South African Liability Insurance

Thanks to South African law, Insurers offer packages that can often be tailored to your unique risks along with a variety of insurance types. Some offers are more comprehensive, while others are pretty exclusive. A few South African insurers are known for specialised liability insurance that will protect specific business types against specific types of liabilities, for example pilots or marine insurance. Vehicle liability Insurance, also known as Motor Liability Insurance, is the most common form of liability insurance.

Motor Liability Insurance

Is your company at risk for claims due to motor or vehicle liabilities? Well, does anybody in the company drive a company-owned car or motorised vehicle? If so, the answer is yes. In fact, liabilities due to car accidents are one of the top risks of most companies. From the director to the truck driver delivering stock, each vehicle can be covered under motor liability insurance, depending on the provider and policy you choose. There are comprehensive options and more basic options available.

Motor liability insurance can form part of your comprehensive business insurance package, part of your general liability policy, or it can be taken out as a standalone product. Either way, protecting your company against damage, injury, or fatality claims due to company cars is an important part of mitigating your risks.

Public Liability Insurance

If your company or any of its employees and representatives encounters any member of the public as part of your business day, you need public liability insurance. Public liability insurance is often included in comprehensive business insurance packages, and the amount of cover you get can vary depending on your needs and provider. If a supplier, customer, or any member of the public claims against your company for damages, losses, or injuries, liability cover comes into play. Retailers, in particular, can benefit from this type of liability insurance.

Employers Liability Insurance

If one of your employees or a group of employees claim against their employer for damages, loss, or injuries, employers liability insurance comes into play. Cover is limited, depending on the wilfulness of an employee’s behaviour or refusal of medical care. If an employer knowingly performs an illegal act, many insurers will also not cover them.

Medical Malpractice Liability Insurance 

Doctors, nurses, therapists, and even beauticians or pharmacists can get specialised liability cover to protect them from liability claims unique to their industry. Logically the most common type of claim against a medical practitioner is bodily injury, negligence, or trauma. Liability risks can also include errors and omissions, negligence, and more. Medical malpractice liability insurance, also known as medical indemnity insurance, can get expensive, but mitigating the high risks often pays.

Events Liability Insurance

Events Liability Insurance is for big events, frequent small events, or even a once-off event. Each insurance provider will offer unique options to mitigate liabilities at your event. Events liability Insurance is for the person running the event, but also for host or sponsor companies and even suppliers and sellers at the event. In some cases, an agreement between parties will oblige you to take out events insurance. This is because events pose so many unique risks to companies. Someone can get injured, their things could get stolen, an attendee could break something that belongs to another individual, and the event could even get cancelled or postponed.

Directors and Officers Liability Insurance

D & O liability insurance is insurance a company takes out to be compensated should any of their directors or officers become embroiled in a liability court case. If the company must defend the director or officer, D&O Liability Insurance pays out to the company to cover the cost.

Errors and Omissions Liability Insurance

Protect your business against negligence claims with errors & omissions liability insurance. If you or one of your company employees or directors is found liable for harm caused due to negligence, malpractice, mistakes, or failure to perform, this kind of liability insurance comes into play.

Product Liability Insurance

This type of insurance is for companies that produce products and is considered a must. No matter how careful your company is, the risk remains that something could go wrong with one of your products or that your company’s name could come up in a lawsuit due to a product. Often product liability insurance can be tailored to the unique risks related to your company’s product(s).

General Liability Insurance

For a comprehensive liability risk solution, choose general liability insurance. It offers broad cover for many of the claims a third party could bring against your company. In many cases, the offering can be tailored to suit your business needs and can include all the types of liability insurance discussed above. Sometimes specialised insurance is also included, for example civil liability insurance or protection and indemnity marine liability insurance.


DISCLAIMER: The information provided in this article is meant for informational purposes only and should not be construed as legal, medical, or financial advice. Facts stated in this article are correct at the time it was published.

Sources: Momentum;;

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