The protection taken to reduce the impact of such occurrence or damages is known as insurance. Legal liability insurance helps cover claims for property damages, injuries, and any form of business setback agreed between an insurance company and a policyholder.
A business or an individual can purchase liability insurance for personal or corporate purposes to protect them from legal liabilities.
One of the causes of bankruptcy in business is the payment of legal liabilities claims. The judgment often involves fines, which run in millions. Therefore, most wise business owners have made it necessary to purchase liability insurance to protect their business. Managing a business without liability insurance is a risk. Nevertheless, there are some limitations associated with insurance, but it is of greater risk not to purchase one because the law must take its cause in eventualities.
When purchasing liability insurance, make sure to outline the policies it covers because your claims and that of third parties are processed according to your guidelines.
The protection you get from buying liability insurance is worth more than the risk of non-payment of claims often encountered at some point.
There are different forms of legal liability insurance. Each protects your company from different categories of liabilities. Below are examples of legal liability insurance.
Public liability insurance
This kind of insurance is a prerequisite for small business owners dealing with the government and multinational companies. It protects your business from being liable for damage claims to a third party and injury to an individual. This kind of insurance is often a part of any business insurance policy. As I said earlier, it is an essential requirement expected by companies you do business with; however, it isn’t mandatory.
Public liability insurance provides protection assurance to you and your client. In addition, it assures those that work for and with your company that they can get compensated when there is an accident.
Employers’ liability insurance
Working in some organizations exposes some employees to hazards and injuries. Therefore, such companies must purchase an employer’s liability insurance. In the United States, employers without this kind of insurance are fined.
Employers liability insurance protects business owners from being liable to employees’ claims. These claims might be due to injuries or death while working in the organizations. Compensations will not be paid for any injury sustained by the employee outside the work area or off duty.
Employers’ liability insurance protects the employers from incurring legal costs due to employees’ claims. Usually, when legal issues arise, the employee would settle things out with the insurance company.
Product liability insurance
When damages are caused by using a particular product, the product liability insurance will protect the parties involved from any form of liability or claims. Product liability insurance is essential even if you are not the direct manufacturer of a product. According to the consumer protection act, a manufacturer, supplier, distributor, and retailer are parties that will be held responsible when a consumer suffers damages or injuries from the use of a product.
A refurbishing company in the United States was held responsible for the malfunction of an electronic device that led to a fire outbreak in a building, even though they were only involved in refurbishing the product package. The device’s failure was due to a manufacturing error; however, in that instance, the blame was passed to the refurbishing company because they had the last contact with the product before the consumer received it.
Therefore, it is often advisable for company’s and businesses to purchase product liabilities irrespective of whether it renders service or manufacture product. As casual as it might seem, a product failure can lead to the death of a consumer, so imagine the kind of claims that would be made.
Errors and omissions insurance
Mistakes are bound to occur in processes or business that involves engineering calculations, estimations, and prediction. Sometimes a slight deviation from the actual can lead to loss of money properties and even cause the death of operators. To avoid paying for claims and lawsuits that may arise from errors and omissions, you should include errors and omissions insurance in your insurance policy. This kind of insurance would also suffice if you missed a deadline, made accounting errors, etc. The policy can also be referred to as professional liability insurance.
Legal liability is backed by law, and any wise business owner should do all they can to avoid the responsibility of doing business with a third party. And they can achieve this by purchasing legal liability insurance, as it would help protect business owners from being liable for any form of damages or injuries.