How Public Liability Insurance Is Of Benefit To Small Companies

How Public Liability Insurance Is Of Benefit To Small Companies

Liability Insurance

Small businesses are usually faced with a myriad of risks that can sink the business. While big companies may be exposed to similar risks, they are big enough to withstand and overcome those challenges. One of those risks is personal injury lawsuits. When customers, employees or other members of the public file an injury lawsuit against a small business, the enterprise can collapse due to the huge legal costs incurred when mounting a potent defense. Secondly, if the defense is not successful the court can award huge financial damages to the plaintiff. No small company is able to pay hundreds of thousands or millions of dollars in financial compensation to third parties. Fortunately, Public Liability Insurance Australia offers insurance policies to protect businesses against the risks brought about by injury lawsuits. 

Why Liability Insurance Is Important

It is crucial for business owners, whether large or small to hire financial consultants or business consultants to help them identify all the risks their businesses face. This is crucial as the information provided by these consultants can inform the business owner about the best types of insurance to purchase as well as the liability coverage limits. The following are some of the benefits of liability insurance:

1. It Pays all Legal Fees

The cost of fighting a lawsuit is usually high. This is because lawyers usually claim high billable hours and charge high rates. The best lawyers, often charge a premium for their services. This means that the cost of fighting a lawsuit can be much higher than you think. Spending your working capital on legal fees can paralyze your business. Fortunately, general liability insurance pays all legal fees that may arise from injury lawsuits filed against the business. If you are properly covered, your business will not be affected in any way, and you will be able to hire the best lawyer to defend your business as the legal fees will be paid by the insurer. 

2. It Pays all Damages Awarded by the Court

Injury lawsuits can be filed for a variety of reasons. For starters, a customer may slip and fall in the office or business premise, getting injured in the process. As a result, they can file a slip and 

fall injury lawsuit. Others can file an errors and omission lawsuit or a professional malpractice suit. Whatever the case, the suit can have a strong basis or a weak one. It is important to note that the plaintiff can win the case even if the case does not have a leg to stand on provided, they have a great lawyer. The good news is that if your business is properly covered, any compensation that is awarded by the court will be paid for by the insurer. This means that your business will not be adversely affected by the outcome of the suit. Most suits usually come with huge financial awards for damages, so you have to make sure you carry sufficient liability coverage.

3. Protects the Reputation of the Business

If a suit is filed against your business, and you are not able to pay legal fees or the compensation awarded by the court, you may have to declare bankruptcy to protect the business. Unfortunately, this will have an adverse effect on your brand reputation. By purchasing a suitable liability cover, you will be able to not only keep your business afloat, but also protect its reputation. This will help to ensure your business thrives in the future. 

Factors to Consider When Looking for Liability Coverage

Every insurance company will claim to offer the best insurance policies, but consumers need to be careful to ensure they do not make mistakes. It is crucial for business owners to consult business insurance brokerage firms as they have a lot of information that may help them make the right decisions. During the search for the right cover, the following are important factors to take into consideration:

i) Liabilities Covered

An insurance policy is defined by the liabilities it covers. You want a policy that covers legal fees and damages that may be awarded by the court. You will need to read the T&C’s of a policy to learn more about the inclusion clauses. This is crucial because you want to know exactly what the policy covers. You may need the advice of an expert to know exactly what a policy covers. This is because insurance policies usually contain a lot of jargon, which the average person may not understand. 

ii) Coverage Limits

The two most important liabilities that must be covered by a policy are legal costs and damages. However, you still need to check the coverage limits for each of those liabilities. If similar types of lawsuits have previously costed businesses $100,000 in legal fees, you should purchase a policy that offers at least $100,000 in legal fees cover. Similarly, if similar suits usually come with $1M to $2m in awards for damages, the ideal policy should provide more than $2M in liability coverage. Ideally, you should purchase a policy that offers a higher coverage limit than recommended. 

iii) Premiums

The premiums charged for a given policy are a measure of risk. The higher the risk, the higher the premiums and vice versa. Be sure to shop around to find insurance companies that charge the most competitive premiums for suitable insurance policies. However, you shouldn’t hesitate to pay a higher rate of premium if a policy seems to offer the best protection possible. 

iv) Exclusion Clauses

It is imperative you read the exclusion clauses that come with a policy to learn about the circumstances under which certain liabilities cannot be covered by a policy. This is because you do not want to purchase a policy that will end up disappointing you in the future when you file a claim. Imagine discovering that the policy does not cover slip and fall injuries in the off-hours. This can be a huge disappointment. Therefore, you have to read the T&C’s and pay attention to the exclusion clauses before you decide to commit yourself.