Public Liability Insurance

 

Liability means being responsible to another person or property. Insurance policies cover liabilities of profession, product, public and general liability.

Liability to the public is covered through Public Liability policy. This policy covers insured’s legal liability to third parties. Public liability insurance policy pays for the claims made, for accidents that occur in the course of business.

This insurance covers general liability risks and third-party accidents directly on the insured’s commercial property. However, it doesn’t cover loss or damage to materials, machinery of one’s own business, employees etc.

Public liability policy pays for personal injury, property damage for accidental death, bodily injury, disease, accidents occurring within the insured premises or during transportation of materials and pollution risk within the period of insurance.

Read on to get more details on the public liability insurance policy.

Terms and conditions for public liability policies 

Industrial risk: This is issued for manufacturing risks where manufacturing process is on and insured is liable to third party damage.

Non industrial risk: This public liability policy is issued to hotels, clubs, exhibitions, godowns, amusement parks, construction works, fairs, stadiums and other non- manufacturing risks.

Public Liability Act (1991): This public liability policy is for businesses that deal with hazardous substances.

Premium also varies with the type of risk and the risk group. Policy is similar to industrial risks policy but for rating, the parameters are different due to the nature of business activity. Risks are categorized into 4 groups I, II, III, IV depending on the risk factor.

How to select the sum insured?

Sum insured is chosen by the insured based on his business financials i.e. turnover, profit, brand image etc.

Insured has to keep in mind the volume of claims that may arise keeping in view of the nature of visitors to his premises and the scale of business operations.

Sum insured is expressed in the form of AOA: AOY and in the ratio of 1:1, 1:2,1:3 and 1:4 and not any other ratio.

AOA: Any one accident

AOY: All accidents in a year

If sum is Rs 10 lacs and ratio chosen is 1:2 then AOA is Rs 5.00 lacs & AOY is Rs 10 lacs

AOA: AOY limits, is to be selected by the insured. Policy can be issued for 12 months but not more than 12 months.

Policy can be extended to include:

• AOG perils
•         Transportation risks
•         Pollution risks
•   Treated effluents risk

Need for public liability insurance cover

Accidents on the business premises involve claims from third parties and affect the policyholder financially. To protect from such claims a public liability insurance cover is advised as it minimizes the financial loss to the insured.

Also, the business process is interrupted due to the ongoing and continuous claims. The insurance policy takes care of such eventualities.

Examples of public liability claims:

•   Loss of life to third party on business premises or due to business activity of the insured
•   Loss of property of a third party because of your negligent business practices.
•   Financial loss to the third party

Benefits of public liability policy 

Physical harm: This policy will pay for medical costs if a third party is hurt after visiting your office and the harm is directly related to your business.

Personal Injury: You are also covered by this coverage against offenses such as slander, carelessness, wrongful entry, and false arrest.

Property damage is any basic third-party responsibility that results from damage to a third party's property that is covered by this policy.

Legal Coverage: Should a customer file a lawsuit against you, this policy will pay for your legal defense costs.

Liability Resulting from Advertising Rights: Your general liability insurance covers you in the event that your marketing division infringes on a member of the public's copyright and that responsibility results from this action.

Contractual and Tenant's Liability: This coverage covers you for any liability incurred if you have a leased contract and operate your business out of a rented space.

Insurer’s liability is taken care of by the policy

Defending the claim is also covered

Business can function normally even after claims are made as policy responds to the liability

Financial loss to the insured is minimized.

Proper planning of business is essential to the success of a business. Taking care of all the risk aspects ensures a seamless business process and enhanced profits. Public liability policy adds to the planning and minimizing of risks.

We at Zen insurance assist in choosing the right Insurance cover to suit your needs. Please contact us for assistance.

 

Disclaimer:

Zen Insurance is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.