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Guide To General Liability Insurance

General liability insurance - better known in the UK as public liability insurance - is insurance that covers your business. It pays out for claims that could otherwise damage a successful business, and if you don’t have cover in place, it could put customers and partners off using your services.

What is general liability insurance?

General liability insurance is the American term for public liability insurance - a business insurance which covers third-party injury or damage claims. You won’t find general liability insurance in the UK - instead, you can opt for public liability insurance, product liability insurance and employers’ liability insurance to cover your business.

Do I need general liability insurance?

If you are based in the US, you will need general liability insurance to cover your business. General liability insurance can help cover medical expenses and attorney fees resulting from bodily injuries and property damage for which your company may be legally responsible. It doesn’t cover employee injuries, auto accidents, punitive damages, workmanship, intentional acts or professional mistakes. Exactly what it covers and how it compares to public liability insurance will depend on the insurer and policy you choose.

Businesses based in the UK will need to take out public liability insurance, product liability insurance and employers’ liability insurance instead.

    • Public liability insurance covers compensation claims made against your business by a third party for injury or damage.
    • Product liability insurance covers compensation claims for injury or property damage that’s been caused by a product you’ve sold, supplied, manufactured, treated, etc. This is often sold alongside public liability insurance policies.
    • Employers’ liability insurance covers compensation claims from employees for work-related illness or injury. If you have contracted employees you will need employers' liability insurance, as employers can be fined up to £2,500 a day while they don't have adequate liability cover. You can also be fined £1,000 if you do not display your EL certificate or refuse to make it available to HSE inspectors when requested.

How does it differ from public liability insurance?

General liability insurance is a term used in the US when referring to the American equivalent of UK public liability insurance. However, in the UK we tend to use the term ‘General Liability’ as a generic term referring to various Liability Insurance policies available to Non-Contracting trades, i.e Public, Products and Employers liability insurance depending on your requirements. For the Construction industry we often refer to Contractors Liability – which would be a combination of Contractors Public and Employers liability insurance.

Things to consider when buying general liability insurance

There are several considerations when buying general liability insurance. This will be a combination of your trade and the liability risks associated with it; your location, trade activities, and geographical area that you work and/or supply. For Manufacturers/Wholesalers/Retailers it will be the type of product you sell and the geographical markets you supply. A business will generally require higher liability indemnity limits where work is carried out in or goods supplied to North America. This is because of higher awards made by North American courts and the increased legal costs that are charged.

We recommend that you seek professional advice form your insurance adviser. Towergate Insurance will be able to assist you.

As with all business-related insurance policies, the following should be considered before purchasing cover:

    • Be honest – you have a legal duty to make a ‘fair presentation’ of your business activities and risks. When speaking to an insurance adviser it is important that you discuss your business risks in order to ensure that your coverage is sufficient and suitable.
    • Be thorough - read the terms and conditions of your insurance policy to make sure your company's requirements are fully covered. Raise any queries with your Insurance Advisor
    • Consider the risks - if an accident caused a member of your staff to get injured you could be liable for many thousands of pounds worth of damages and legal defence costs. It is equally important to consider the risks presented to members of the public arising from business activities and the supply of products.

This is a marketing article by Towergate Insurance.

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