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What is Third-Party Liability Insurance?

Third-party Liability insurance is insurance that covers you when you are liable to pay for damages, injuries, or losses you have caused to another person or their property. “Third-party” refers to a person who isn’t you or someone insured in your policy, and a person who also isn’t your insurer. If you are responsible for damage to them or their stuff and they institute a claim against you, third-party liability cover comes into play.

Do I Need Third-Party Liability Insurance?

South African business owners can benefit from third-party liability insurance in many ways. Many industries have specific liability risks that need to be covered. Because liability is such a volatile risk, where claims can easily hike to enormous amounts, businesses cannot afford not to get third-party liability insurance. Although considered optional by some, third-party liability insurance is essential to every business and can mean the difference between disaster and success.

What Risks Can Third-Party Liability Insurance Protect my Business from?

The liability risks associated with different businesses can vary a lot, but it comes down to what damages, injuries, or losses your company may be found liable for should a third-party choose to claim against you. Your industry can influence the type of third-party liability insurance you choose. In South Africa, you can benefit from tailored options that suit your industry and needs so your liability risks are managed well.

Some insurance plans include cover for third-party liabilities as part of a commercial insurance offer, while other insurance plans give you the option of choosing third-party liability cover aside from other options. The possibilities change from provider to provider, so before you choose which insurance provider is for you, consider how you want to insure your company. If you prefer building your own insurance cover with separate plans for separate risks, make sure the provider you choose offers you the option to do that. If you prefer a comprehensive plan that covers all your business needs in one package, find out if such a product is offered by your insurance provider of choice.

Types of Third-Party Liability Insurance Available in South Africa

The most common type of third-party liability insurance is third-party insurance for cars. Other types of third-party liability insurance may cover liabilities based on your industry and the risks involved in your business operations. Each insurance provider offers different options that may include customisable packages, while others often offer a narrower selection of cover options.

Here are some the types of third-party liability insurance options you may encounter in South Africa:

Third-Party Liability Insurance for Vehicles

Your cars, fleet, or business vehicles are one of the top liability risks for your company. An accident can set you back by large amounts, so protecting your business from third-party claims against your company where your vehicles are involved is essential. The more vehicles your company owns, the higher the risk. Logistics companies can arguably benefit the most from this type of insurance cover, as their vehicles are constantly on the road and at risk for accidental damage and injury claims.

Third-party insurance for vehicles can take the form of fleet or car liability insurance packages that exclusively offer cover for liabilities to third parties and do not include cover for your business’ own damages. Insurance providers may also include it in a comprehensive vehicle or fleet cover solution. Often, third-party liability insurance is also called Motor Liability Insurance. Sometimes industry-specific solutions will include third-party liability cover too.

Third-Party Liability Insurance for Employers

Any business that has employees needs third-party liability insurance for employers. This type of insurance offers protection against claims by employees against an employer for damages, losses, injuries, and even fatalities. Companies often take extensive measures to lower the risks of injuries on duty, but every business is at risk for workplace injuries, damages, losses, and even fatalities.

Also known as Employer’s Liability Insurance, this type of third-party liability cover is limited in that cover is not offered if an employee wilfully refuses medical care, or wilful acts by the employee or their co-workers that lead to the damages claimed. In some instances, third-party liability insurance for employer’s is a requirement, so before you choose an insurance cover option, make sure you know what is expected of you as the employer.

Third-Party Liability Insurance for Events

Does your company often host or participate in large events? Events put your business at risk for unique kinds of liability claims. Even if you are only hosting a small event, third-party liability insurance can protect your business against huge losses should something go wrong at the event.

Third-party liability insurance for events can take the form of comprehensive plans that cover a broad scope of risks, or it can be tailored to your specific risks. Sometimes a company can be held liable for damages, injuries, or fatalities at an event even if they didn’t host it themselves. This can happen if the company sponsors, endorses, or funds an event. Some event liability options include cover for cancellations and liquor liability. This type of insurance is also called Events Liability Insurance.

General Third-Party Liability Insurance

The term “general” means that this type of insurance offers you protection for a broad scope of third-party liabilities that can put your business at risk. It’s a more comprehensive option for companies with multifaceted third-party liability risks. From employee injuries to defective products, general third-party liability insurance offers companies more cover, and this is why it is the preferred insurance option even though it can cost more. Also called General Liability Insurance can sometimes be bought by itself or as part of a business insurance package depending on the provider.

Third-Party Liability Insurance for the Public

Considered the bare minimum for insurance required for businesses in South Africa, Third-party Liability insurance for members of the public covers damages, losses, and injuries to customers, consumers, suppliers, and other members of the public your business comes in contact with. If any such party deems you responsible and claims against you, this type of insurance protects your business financially. Because almost all businesses come in contact with suppliers, customers, or other third parties, third-party insurance for the public, also known as Public Liability Insurance, should be included in your business insurance cover.

Other Types of Third-Party Liability Insurance

There are many more kinds of third-party liability insurance options, and many of them cater to industry-specific needs. These are just a few of the more common types of industry-related third-party liability insurance cover options you may encounter or need.

Third-Party Liability Insurance for Medical Malpractice

This type of insurance is also known as medical indemnity insurance in South Africa and covers medical practitioners against the third-party liability claims they are at risk for. These claims can include bodily injury, legal fees, alleged negligence, errors or malpractice, and even mental and emotional trauma. Any licensed healthcare professional, whether beautician, pharmacist, or surgeon, needs this type of cover to protect them against a rising number of medical malpractice liability claims.

Errors and Omissions Third-Party Liability Insurance

Also called malpractice insurance or legal services insurance, or professional indemnity insurance, this type of insurance covers professionals whose job it is to offer advice, solutions, or educated recommendations. If a third-party claims damages, injury, or losses due to the services of the said professional, they can get protection against the claim through errors and omissions third-party liability cover.

Directors and Officers Third-Party Liability Insurance

Third-party insurance for Directors and Officers, also called D&O Liability Insurance, covers the company in instances where it must defend a Director or Officer against a claim. That means the payout goes to the company to cover defence costs when a Director is held liable for acts of negligence, misleading statements, omissions, and other acts that lead to a lawsuit. Directors and Officers Third-party insurance does not usually cover intentional illegal acts.

Find the best third-party liability insurance for your business’ needs today. To get started, fill in the form at the top of this page (it’s free).


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: Investopedia;;

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