Liability FAQs: All you need to know about liability policies

Liability insurance policies provide an indemnity against your legal liability for damages which can arise from accidents or incidents at your venue. 

In this article, we’re jargon busting so you understand the various Liability policies that could protect your business. What cover do you need? 

Is Public Liability Insurance required by law? 

Public Liability Insurance is not required legally. However, if your business involves dealing with members of the public then you should consider Public Liability Insurance. 

It covers you for compensation payouts or legal costs that occur as a result of any third-party injury or damage caused by your negligence. 

As with all types of insurance, it is your responsibility to minimise the risk of an accident or injury happening on site. Spurious claims can be defended. This won’t usually impact your excess or premium. However, you will need the right documentation and records in place to prove the incident was not your fault. Speak to the Romero risk management team for more information. 

Do I need Employers’ Liability Insurance? 

Yes. You are required by law to have suitable Employers’ Liability Insurance in place if you employ any member of staff. This includes temporary workers, casual or flexible employees or even volunteers. 

If an employee suffers an injury or illness at work, they may make a claim against your business. Having comprehensive Employers’ Liability cover in place will give you peace of mind that, should you be found liable, your business won’t have to foot the bill for hefty defence costs or compensation settlements. 

Do I need Employers’ Liability as a director?

Employers’ Liability is needed if you hire any employees, or work with ‘labour-only’ subcontractors. Even if you have just one other director, you’ll need Employers’ Liability.

This cover is not legally required for self-employed workers, or unincorporated family businesses. If you are the director of a limited company (and don’t employ anyone else), and own over 50% of the share capital you won’t need Employers’ Liability cover either. 

What is Directors’ and Officers’ Liability Insurance? 

If something goes wrong and your business is liable for an accident or incident, a director, partner or officer of the company’s personal assets could be at risk. This type of cover will protect senior members of a business financially. If someone does make a claim against them personally, they will be covered. 

Breach of duty, lack of due diligence, defamation, negligence or health and safety claims could all impact an individual as well as the business as a whole. Directors and officers could face claims from other senior members of the business, competitors or employees. It’s important you’re not left personally paying expensive legal fees and compensation payouts. 

Sometimes Directors’ and Officers’ Liability cover is also known as Management Liability Insurance. 

What is Product Liability Insurance? 

If someone is injured, or their property damaged, as a result of your product then they could make a claim against you. 

For example, if you manufacture a product that causes injury or someone gets food poisoning from a product you’ve baked then you could be found liable and left paying out a large compensation sum. 

Even if you don’t manufacture a product, but your business name appears on the product, you will be found liable if someone does suffer injury or illness as a result of that product. If you import products outside of the EU for sale in the UK, you will also need Product Liability Insurance. 

Both manufacturers and retailers have a duty of care to ensure the products they sell to customers are safe. Ensure you provide instructions and alert customers to any potential risks. You should also take any safety concerns seriously and deal with them quickly and efficiently. For more guidance on the importance of health and safety and how to implement the right procedures, speak to our risk management team. 

Does Product Liability Insurance cover design? 

Yes. Product Liability Insurance covers you if you design, manufacture or repair/refurbish products. 

What is Professional Indemnity? 

If you provide a professional service, you could be faced with a claim of negligence if your advice or service causes damage to your client. This could include accusations of negligence, defamation, sharing confidential information or copyright infringement. 

Anyone who provides advice or expertise, or handles client data, may need to consider Professional Indemnity. The number of applicable businesses is wide-ranging. This includes everything from marketing to accountancy. Human error is sometimes unavoidable, and accidents happen. Just make sure your insurance policy is there to foot the bill if someone does make a claim against you. 

What’s the difference between Public Liability and Professional Indemnity? 

Public Liability will cover you for any third party property damage or injury. Professional Indemnity will cover you for mistakes such as bad advice, negligence or professional slip-ups. If you manufacture a product, you’ll need Product Liability cover instead. 

To summarise, it’s important to have the correct insurance policies in place. This protects your clients, customers, members of the public and employees. But it’s also important to give yourself and your business total peace of mind. You don’t want to be left paying out large sums if something does go wrong. 

Of course, there are other types of insurance cover to consider too. This includes Business Interruption cover, in case you’re unexpectedly unable to trade for a period of time, Cyber Insurance and many more specific types of additional cover. 

For a confidential review of your Liability policies, or a chat about how best to protect your business, get in touch with our expert team.