As a business owner, you need to be sure you are always protected. Most businesses have insurance on the building, commercial auto insurance, worker’s compensation insurance, business income insurance, and data breach insurance. One type of business insurance that should never be overlooked is public liability insurance. If you are unfamiliar with this coverage, read more about public liability insurance below.
What Is Public Liability Insurance?
Public liability insurance is a type of insurance that covers the cost of a claim against your business by a member of the public. The insurance only covers the cost of personal injuries, property loss or damage, and death that occurs on your business property. You won’t be covered if an incident occurs anywhere other than the business property.
How Does Public Liability Insurance Work?
Public liability insurance protects you against a lawsuit. For example, if a customer slips and falls on a wet floor and they are injured, the customer can file a lawsuit against your company for compensation. Even if a wet floor sign was placed in the area, you could still be held liable.
If someone files a claim against your business, public liability insurance will help cover the legal costs and the damages owed to the victim. The insurance may not cover the entire claim. If the victim’s compensation and the legal costs are more than the limits on your policy, you will need to pay the difference.
What Does Public Liability Insurance Cover?
Public liability insurance protects you in several ways and covers the following:
Bodily injury: If an employee is injured on the job, your worker’s compensation insurance will cover their medical bills and lost wages. Public liability insurance covers your customer’s or client’s injuries, and the insurance covers the cost of their medical bills.
Property damage: If a customer’s property were damaged on your business property due to a covered incident, your public liability insurance would cover it. For example, if you own a supermarket and an employee damages a vehicle with a shopping cart, your public liability insurance will cover the damage to the vehicle. If you own a coffee shop and an employee spills a coffee on a customer’s laptop, the insurance will cover the damage.
The customer’s property must have been damaged on your business property, and the damage to a customer’s property must have been your fault or the fault of an employee.
Legal expenses: If a customer is injured or their property is damaged on the premises, they can file a lawsuit. Fortunately, your public liability insurance will cover the cost of hiring a lawyer to defend your business and other legal costs associated with the lawsuit.
What Is Not Covered By Public Liability Insurance?
Although your public liability insurance has essential coverage your business needs, there are things that aren’t covered under the insurance, and you should know what isn’t covered.
- Coverage for injured workers, which would be covered under your worker’s compensation insurance.
- Illness due to asbestos
- Punitive damages: Punitive damages are damages awarded by a judge who believes your negligence was so severe that they award the victim extra damages and money, and punitive damages are not covered under your public liability insurance.
- Liquidated damages
- Product recalls
Although these aren’t covered losses, you can find other types of insurance that will cover these costs if necessary.
Do I Need Public Liability Insurance?
Certain types of insurance are required by law, such as worker’s compensation, unemployment insurance, and disability. Public liability insurance isn’t required by law, but it will provide additional coverage necessary to prevent a lawsuit and provide coverage if you are sued.
Whether you need public liability insurance depends on the type of business you own, where the business is located, and your business needs.
Public liability insurance is more limited than traditional business insurance and is more affordable. If you own a small business or you are just getting your business off the ground, public liability insurance is a great option because the lower cost can save your business money. If you become very successful and can afford the high business insurance premiums, you can always upgrade anytime.
Public liability insurance isn’t required by law; however, you still need it. This insurance protects your business and could keep you from losing everything if a customer or client is seriously injured on your business property.