Do you need to go for liability insurance?

Is there any chance that in the process of your business operation one of your employee or end user or somebody else may get injured or their property gets damaged? If your answer is yes, the concerned party or business may sue you.

This is not a discreet situation. This may happen irrespective of the mode of business that you run. Thus it is very important that you seriously consider liability insurance.

What is liability insurance?

Liability insurance is developed in such a way that it protects your business from that costs that you incur when the end user of your product or your employee wins a law suit against you for damages caused by you.

Like other insurance policies in UK, here too you need to pay a premium (cost of insurance) to the insurance company. Normally the insurance companies charge a book rate depending on their previous experiences with similar companies or according to their rules and guidelines. At the same time the premium amount may also be revised depending on your business model. They normally calculate the premium amount depending on the employer’s payroll or turnover of the company. If you are running a large organization, the insurance company may take into consideration your previous records in similar situations.

In the same line, to cover the costs involved in legal exercises in any such claim proceedings, you should go for Legal expenses insurance as some cases are not covered by liability insurance. In this situation, the legal expenses insurance companies will take care of necessary expenditure and will also provide you legal helpline. At the same time you also need to consider ELCI if you are a limited company and employ people beyond your family members.

If there are chances that your product or business may damage or injure the end user, you must go for public liability insurance. These types of insurances cover the cost you incur as awards of damage to the concerned party along with legal fees and treatment cost etc.

Though public liability insurances are not mandatory, you must consider the risk factors associated with your business model. People often ask if you have proper insurance before they allow you to work for them or before they purchase your product. Thus if you do not have liability insurances, you may loose potential customers. Thus to operate your business smoothly, you must consider these issues seriously. Always talk to a liability insurance professional before you take any such insurance plan.