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Advice On 3rd Party Liability Insurance
3rd Party Liability Policies
There is quite a lot of confusion around different types of liability and indemnity insurance, so in this article we will examine what the different types of policy are and what their function is in relation to your business. Some of these commercial insurances aimed at businesses of all types are often sold together as packages. It is not uncommon to find public liability insurance and professional indemnity insurance being sold in this way.
Public liability cover is also known as 3rd party liability insurance and the function of this type of policy is to protect your business from any claims for property damage or personal injury incurred by any third party. The term third party in this instance just means anyone other than you and your own directly employed staff. So third parties include visitors, clients, contractors, members of the public, etc.
Professional indemnity insurance is to guard against the cost of claims for negligence or damages in relation to any professional advice or service that you provide. If you were to advise a client to take a particular course of action and this subsequently turned out to be disastrous for their company, they may well try to recover their losses from you, and the cost could be huge. This is what professional indemnity insurance is there to protect you from, and in situations like this is can make the difference between whether your own business survives or not.
It is all about managing risk. You need to try to predict your level of risk and making contingencies against claims. You have to weigh up the cost of the premiums against the potential cost of not having a policy in place for these third party claims. You cannot of course foresee when accidents will happen, but you can think about the types of situations that could lead to claims and how likely it is that some of these will occur.
Some business types will have more risks inherent in their business than others, but there are few that are completely risk free. As soon as you allow people to enter your premises you are running the risk of them having some sort of mishap and looking to you for compensation. Similarly, if you carry out work on other people’s property, it is easy for someone to bump into an item of furniture or knock over some valuable ornament.
It is a sad fact of life today that people are far more likely to sue for the slightest reason, however unreasonable. If personal injury is part of the claim and fees for lawyers are involved, it is very easy for the total costs associated with meeting such a claim to grow to substantial proportions. Costs on this scale are simply too much for many small businesses to absorb, so if you think about what the impact of such a large claim would be on your business, an appropriate insurance policy can begin to seem like a much better option.
The cost of premiums for 3rd party liability insurance can vary a lot, but will depend to a great extend on the type of business you run and the size of your operation. You will need to provide various bits of information when you apply for cover, and these will be used to work out how much it will cost you. Your turnover is one indicator that is most often used by insurers to arrive at a quote for premiums.
