Liability insurance protects you against financial loss if your actions or your negligence is found to cause a person to be injured or killed, or a persons’ property to be damaged or destroyed.
Liability products are most commonly taken out by businesses for risks involved in day-to-day operations, but they are also built into many property insurance policies, for example, liability cover in home and contents insurance.
There are three forms of liability insurance:
- Public liability - Covers a person, a business, an event, a contractor – even a community building – for costs from legal action if they are found liable for death or injury, loss or damage of property, or economic loss, resulting from their negligence.
- Professional indemnity - This is a type of liability insurance however it’s not covered within general liability insurance policies. We will cover this type of insurance in a later article.
- Product liability - If you manufacture, sell or distribute products or you import products into Australia, you should have product liability insurance. This type of insurance covers you for damage or injury that you might cause to another business or person by your product or service. It’s an important insurance to have because people who believe they have been injured by your product can take action against you as a manufacturer or importer. In many cases, this action can be taken without the person who sues you having to prove you were negligent or had any intention to cause harm.
Liability insurance covers two key financial risks. One is the legal cost of defending a claim. The second is the compensation that you may be directed to pay to the injured or wronged party, plus their legal costs, if a claim against you is upheld. These usually include an excess to be paid by the policyholder in the event of a claim, and generally set a limit on the total amount payable under the policy, as well as a per-claim limit.
To find out more about liability insurance or to update your existing policy, contact your local Phoenix Insurance Broker.