Public liability insurance is essentially a category of business insurance that provides coverage for the cost of public claims that take place in relation to your business activities. This type of insurance assists in covering the costs for personal injuries, death and damage to or loss of property. In addition, it provides coverage for the cost of hiring a lawyer to represent the business should a lawsuit be brought by a customer or another individual. Highlighted below are the pros and cons of public liability insurance as suggested by the staff at Publicliabilityaustralia.com.au:
Pros of Public Liability Insurance
• Protects Your Business
A taxi company is a good example of this. Not only is a taxi driver responsible for the safety of himself or herself and the passenger, but for the general public as well. For a taxi company, public liability insurance is as vital as taxi insurance; however, the two are separate – you do not get public liability insurance automatically when you receive taxi insurance.
Public liability insurance provides protection for you and your business. The insurance is designed to safeguard you against any accidents or unforeseen circumstances involving the general public and the passengers you transport.
• Capability of Lowering Premiums
With this insurance, you will be able to influence some of the issues that control premium cost. The primary method of controlling the cost is to lower workplace risks. For example, you should make sure that workers have the proper training and qualification to carry out their functions. Additionally, employees should be required to complete safety training and should always be provided with a safe environment. Whether your overall premium will be significantly affected partly depends on the status and type of your business.
• Reasonably-priced and Time-saving Coverage
Although the premium for public liability insurance can cost a lot, the coverage can save you considerably should you have to make a claim. For example, if you have security systems installed on a client’s property and his or her system fails, resulting in a significant financial loss, your company could be sued. Often, a lawsuit involves great expense. Without this type of insurance, the full costs will have to paid out of your own pocket. However, if you have this insurance, the expenses are covered up to the limits of your policy.
Cons of Public Liability Insurance
• Wording of Policy and Availability of Coverage
One disadvantage is that there is no standard policy wording. Therefore, it is important to carefully read the individual policy carefully to make sure that it is fitting for your specific situation. For instance, punitive damages might not be covered by some policies, which could result in a substantial amount of out-of-pocket cost. Additionally, not every public liability insurance provides coverage for your specific business; some specialise in certain categories of businesses. You might have to spend additional time to see a provider that is suitable.
• Uncontrollable Factors Regarding Premium Cost
Another disadvantage is that the cost or premium is mainly based on factors that are beyond your control. The rates of your premium are affected by factors like state laws, the current financial status of your business, the number of claims filed by companies in your industry and the length of time your business has been in operation. For example, if your business is new and has a fledgling financial status in a trade with a track record of multiple claims, the premium required could be substantial.