Public Liability Insurance |
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A brief overview of public liability insurance in the United Kingdom.
Often referred to as third-party liability insurance, Public liability insurance offers protection to the policyholder in respect of their legal liability for injury or damage caused to third parties arising out of and in course of the operation of their business.
The "sum insured" under public liability insurance policy is known as the Limit of Indemnity, and this relates to the maximum amount payable by the insurer in the event of a claim. in the United Kingdom, most public liability insurance policies have a minimum limit of indemnity of £1 million. Limits of £2 million and £5 million, are widely available, although this will vary from insurer to insurer, based on the activities of the policyholder. Additional limits are also available and these are often required under contract wordings issued to clients.
An important aspect of any public liability insurance contract, is the cover provided in respect of legal defence costs. This means that the policyholder is financially protected even in the event of spurious claims.
Product Liability provides to the policyholder legal liability insurance in respect of goods and products sold and supplied during the course of the business. This cover is not automatically include it within a standard public liability insurance wording, although when required. It is almost always purchased as part of/an extension to the public liability insurance. An individual's or business's requirement that the fact that of cover is very much dependent upon the activities trade or occupation of the policyholder.
Like other business insurances, this is very much a factor of the risk involved in the policyholders business or activity. The activities of a policyholder are by far the most important factor in the calculation of premiums for liability insurance.
Traditionally, public liability insurance premiums and product liability insurance premiums are calculated on wageroll and turnover. This method allows the insurer to base the premium on the level of work being undertaken.
in the last few years, many insurers have introduced "per capita" rated contracts that offer, public liability insurance and employer's liability insurance, based on the number of persons involved in the business or activity and the limit of indemnity required, subject to the policyholder being engaged in a standard profession or occupation, appearing on the insurers own acceptable trade list. These contracts can be very competitive for small businesses, but often as the number of employees grows, the policyholder may be better served by a traditionally rated in contract.
It is essential when arranging public liability insurance that you make a complete and full disclosure of your business activities and your business description to your insurance broker or insurance company.
as stated earlier, the policy applies to legal liability claims arising out of, and in course of the operation of the business, and it is essential that a policyholder ensures that the Business Description on the policy schedule adequately represents the activities undertaken in the course of the business. Failure to do so may result in insurer repudiating a claim. The logic behind this is that the insurer has not been made fully aware of the risk and has not had the opportunity to charge the correct premium in relation to the risks involved.
Most public liability insurance policies issued in the United Kingdom will be issued on the insurers standard legal liability policy wording and will be accompanied by a schedule detailing the individual requirements and cover levels applicable to the policyholder. The schedule will contain details of any additional policy endorsements that are applicable to that policy. These endorsements are of great importance to the policyholder, as they may restrict, or in certain circumstances extend, the standard policy coverage. Insurers use endorsements for a variety of reasons, but perhaps most commonly to restrict certain activities under the policy or to ensure that when certain activities are undertaken, they are done so in a prescribed and safe manner.