No matter the kind of safety measures you take for your business, some accidents are unavoidable. Unfortunate incidents of someone getting hurt in your office, shop, or factory can occur at any point of time.
In order to sufficiently tackle these risks and reduce their financial repercussions, businesses opt for Public Liability Insurance also known as Third Party Liability Insurance. This kind of insurance is essential for any business that interacts with its customers in-person.
In fact, the 1991 Public Liability Act made it compulsory for businesses handling hazardous chemicals to have this policy. This act came into force post the 1984 Bhopal Gas Disaster, so that those affected by accidents due to hazardous materials can receive immediate monetary assistance.
Public Liability Insurance policies cover injuries and property damage suffered by third parties / outsiders while on the business premises. Restaurants, shopping centres, theatres, construction sites, public events, etc. need a Liability Insurance policy in order to minimise their legal liability in the event of an unexpected accident.
Public Liability Insurance or Third Party Liability Insurance primarily covers a business’s third party liabilities, meaning their liabilities arising out of injury or damage to persons other than their employees or staff. This insurance is generally divided into two kinds :
- Public Liability Industrial Risks - This covers the third party legal liability of manufacturing, warehousing and construction industries
- Public Liability Non-industrial Risks - This covers the third party legal liability of non-manufacturing entities like IT companies, hotels, schools, restaurants, hospitals, etc.
The following covers are provided under these policies :
- Legal liability to pay compensation to third party on account of bodily injury, disease, accidental death, or property damage caused due to accidents occurring on business premises
- Legal costs and expenses incurred by the insured with the prior consent of the insurer and within the limits of indemnity
You can cover the following by paying additional premium :
- Act of God perils (these include natural disasters like earthquakes, floods, storms, etc.)
- Industrial Seepage, pollution and contamination
- Food and beverages liability
- Lift, elevator or escalator liability
- Transportation liability
- Carriage of effluents outside the business premises
These add-ons vary from insurer to insurer.
Public Liability Insurance keeps a lot of perils out of its scope. Some of these exclusions are :
- Fines, penalties, punitive or exemplary damages
- Deliberate and wilful non-compliance of any statutory requirements
- Financial loss like loss of goodwill, loss of market, etc.
- Damage to property that is owned, occupied, controlled or in the custody of the insured
- Bodily injury, death or property damage to persons who are employed by the insured business
- Liability purely arising out of contractual agreements
- War, strikes, riots, terrorism and nuclear perils
- Liability arising out of dishonest or criminal acts of employees
For establishments that frequently deal with members of the general public, like hotels, restaurants, hospitals, shopping centres, banks, etc., a Public/Third Party Liability Insurance policy is vital. This insurance is usually included in a Commercial General Liability Policy and can also be added to other insurance policies.
How do professionals and businesses protect themselves against claims of negligence or misconduct? Learn here