What is Public Liabilities Insurance? (Meaning, Coverage & Examples)

Businesses succeed with the combined support and effort of people such as employees, clients and customers. But a lot of times, these clients and customers could face accidents that take place in a business premise. Hence, it is considered an important policy for businesses to purchase Public Liability Insurance.

What is Public Liabilities Insurance?

Public liabilities insurance offers protection to the business in case any third-party liability arises out of injury or property damage. These third parties could be customers, clients or members of the public. As public liability insurance policies help reduce the financial burden that may pop up because of third-party liabilities, it can also be called third-party liability insurance.

If public liability insurance works in combination with product liability insurance, it is also known as Commercial General Liability Insurance.

Public liability insurance is very important for businesses owners, restaurants, hospitals and even doctors. It is usually acquired by enterprises, and even individuals who could possibly be held accountable for legal or financial liabilities. For instance, if someone is visiting your office and they slip and sustain an injury (like a sprain or a broken ankle) which will lead to hospitalization, this insurance could help you pay off the hospital bills and deal with the legal liabilities.

Examples of Public Liability insurance are:

• Public Liability for non-manufacturing units such as IT firms, restaurants, schools, clubs, BPOs among others.
• Public Liability for manufacturing units such as warehouses and storage units.
• Public Liability for business units that deal with hazardous substances

What is Covered Under Public Liability Insurance?

Many public liabilities insurance policies provide extended coverage for industrial risks, non-industrial risks, all business units dealing with hazardous substances, etc. They also provide more comprehensive protection by covering the legal expenses that could arise out of:

• Sudden and accidental pollution
• Transportation
• Carriage of treated effluents
• Natural calamities

Given below is a list of things covered by a public liability insurance:

1. Lawsuits and Settlements: If your business gets sued for damage or loss caused to a third party, the insurer will cover the cost of hiring a lawyer or investigating officer.
2. Damage to Property: This policy will cover damage or injury caused to a third party by an accident in your office premises. Damage caused due to your products, operations or promotional advertisements will be covered by public liability insurance. It will also cover the liability arising due to damage caused to a third party’s property while visiting your office.
3. Medical Expenses: In case a third-party gets injured in your office or business premises, the medical expenses will be covered under the public liability insurance.
4. Tenant’s Liability: If you have a rented business space, and any liability arises, then the expenses will be covered under the public liability insurance policy.
5. Copyright Liability: If your marketing division violates the copyright policies, the liability will be covered.

What is Not Covered Under Public Liability Insurance?

A public liability insurance does not provide cover for certain situations. They are as follows:

1. Any damage to your business property is not covered under public liability insurance.
2. Any damage or injury caused to workers is not covered. For such situations, businesses should have Employers’ Liability Insurance.
3. The insurer only covers liabilities that arise out of third-party property damage, injury, disability etc. To cover professional errors, the business should buy professional liability insurance.
4. Any deliberate or intentional damage is not covered.
5. Damages that arise out of penalties, fines or exemplary damages are not recompensed.
6. Damages arising out of situations like war are also not covered.

Why is Public Liability Insurance needed?

Having public liability insurance is not a statutory legal requirement. But it is necessary to buy it in order to protect the business from financial problems. In India, public liability insurance is made in such a way that it caters specially to individuals or businesses who could be held legally responsible to pay for damages and injuries caused to a third party. For example, if your product causes damage to someone else, then your company could be sued for the loss.

If your business engages in any of the following, then you should consider buying a public liability insurance:

• If you interact with clients frequently or regularly
• If you represent your client’s business
• If you are using a third-party site for your business operations
• If you have access to any or all of your client’s assets

How to Claim Public Liability Insurance?

After buying a public liability insurance policy, it is also important to understand the claim process for it. To file for a claim, you can follow the steps given below:

Step 1: Properly analyse and evaluate the damage and loss that has happened.
Step 2: As soon as possible, inform the insurance company in writing.
Step 3: Collect the proof and evidence.
Step 4: Provide the needed medical certificates in case of injury or death.
Step 5: Submit the duly filled claim form and the required documents.
Step 6: a professional will evaluate the file and decide whether to accept or reject the claim.
Step 7: If you are not satisfied with the decision of the insurer, then you can approach the court.

The documents required for the claim process are:

• Duly filled claim form
• The required documents to support the case
• Copied of proof and evidence
• In case of injury or death, medical certificates

What are the Situations Where You Can’t Claim Public Liability Insurance?

Though public liability covers many situations, there are certain cases which are not covered under it. These are also known as exclusions. Some of these are:

• Intentionally not complying to safety or legal provisions.
• Errors while performing and dealing with legal or contractual liability.
• Cases like false arrest, defamation, libel, slander, loss of goodwill, mental loss or damage.

This insurance ensures that businesses succeed without facing any unexpected financial losses. There are also alternatives for public liabilities insurance such as general liability insurance. Before buying any public liability insurance, it is important to know about all the aspects related to it. This will help you make the decision that will be best for your business.