Liability Insurance

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What is Liability Insurance?

Liability insurance protects companies against claims made by employees, third parties or members of the public related to negligence or fault made by the company. Liability insurance covers claims against injuries, illnesses and even death if the company was responsible for the incident.

It is up to the employer of the business to arrange the insurance cover and to find the most suitable policy for their business' activities. As long as the correct insurance is in place, the company will not have to pay out for claims made against them or for any legal fees involved.

There are several types of Liability Insurance available, click the links below to find out more information about that type of liability cover.

• Employers' Liability
• Public Liability
• Professional Indemnity
• Product Liability
• Directors' & Officers Liability

Why do companies need Liability Insurance?

If your company is in any way at risk of being sued by an employee or a third party you should speak to an insurance adviser about suitable cover. Compensation is a term we hear all the time and there are companies who help people claim the highest possible amounts - sometimes we're talking millions of pounds.

If someone were to claim against a small company that didn't have the suitable insurance cover, consequences could be drastic. They could face paying thousands if not millions of pounds worth of compensation plus any legal fees involved.

It is not only companies themselves that suffer, the business owner can also be held liable if they have been careless or found to have made errors that were responsible for the injury, illness or damage.

Always make sure you have the correct liability insurance and if you are in any way unsure, contact your insurance company and double check your policy completely covers you.

How is a Liability Insurance Premium Calculated?

Business Type

The amount you pay for your liability insurance depends on a number of factors. Firstly it depends on the insurance company and whether they actually want to insure your type of business. If they don't they will generally set their premium quite high.

Claims History

Another factor they will take into consideration is your claims history; usually premiums for companies who have claimed in the past will be set higher than for those who haven't.

Business Risks

They will consider the risks and possible situations your company could encounter, if your business activity is very low risk, your premium is likely to be quite a bit lower than if there are high risks.

The Nature of your Business

Working in a potentially dangerous environment

Working with potentially dangerous tools or machines

Manually handing heavy loads

Working closely with materials that are hazardous

Working on uneven or slippery floors

Using protective clothing such as masks or headphones

If your business involves any of the activities above your premium is likely to be higher because they increase the risk of a claim being made.

Number of Employees

Employers' Liability Insurance is usually calculated by the number of employees the company has. The more employees the higher the risk of someone claiming.

Company Turnover and Business Activity

Public Liability and Product Liability Insurance are usually based on turnover and business activity, for example where the employees work.

What type of adviser can help?

For advice on insurance cover related to your business' liabilities you will need to speak to an Insurance Broker.

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This content is provided for general information only, and should not be treated as a substitute for the advice given by any professional.