No matter how big or small, starting and running a business will always entail an element of risk. As important as it is to be aware of your legal obligations and responsibilities, such as the standards you must keep to ensure you are compliant with the law or the licences you may need to conduct certain business activities, there will always be situations which are unforeseeable. This is why businesses need liability insurance. This is also why, depending on your business activity, some insurance is mandatory.
When it comes to liability insurance, there are three different types you may need to consider: public liability, professional indemnity and product liability. Depending on the type of business you conduct, you may need to consider an insurance policy that will limit your monetary burden if you were to be responsible for the damages or injuries of another person or property.
Do you operate in a commercial or retail premises that is open to visitors or third parties? Do you provide hospitality services that may require you to maintain specific hygienic standards? Public liability addresses a range of businesses activities that could cause death or injury to third parties, loss or damage to property or economic loss as a result of negligent actions. There are a range of laws in place that determine the standard of care you need to maintain, however, public liability insurance helps to limit the financial risk if you were to be sued. In some circumstances, for example when signing a commercial lease, you will be required to obtain public liability insurance so that you will be protected up to a certain amount if, for example, a person were to be injured while visiting your commercial premises.
If you provide any form of advice, whether it be financial, legal or medical advice, your advice will likely be relied on as a result of your qualifications and expertise. If a client were to act on your advice and were to suffer a material, financial or physical loss, you may be deemed responsible and liable to pay for their losses. For many professions, professional indemnity insurance is a mandatory requirement. It protects you from any advice that may be given negligently. This includes accountants, doctors, nurses, architects and psychologists, among many others.
Are you supplying goods that are expected to be safe to use? Are you providing services that may affect a larger system, for example, as an electrician? There are many instances where a good or service that you create or sell could cause injury, death or damage. Of course, you cannot always be aware of when a product will fail or whether the services you provided caused unforeseeable damages. This is when product liability insurance comes in handy, as it ensures that you are protected if these events do occur.
There are a range of insurance companies and brokers that can assist in determining the insurance needs of your business. There are also other ways to ensure that you are protected. Contractual agreements are often drafted in order to limit your liability as much as legally possible. At LegalVision, we have experienced commercial lawyers who can assist in drafting Client Agreements, Warranties and Disclosure Statements. If you are starting or running a business, it is important to be aware of your responsibilities to your customers and ensure you have the strategies in place to mitigate risk.