By nature, business operations involve a certain degree of risk, but you can prevent problems as long as you manage the risk properly, right? In fact, many of the hazards affecting business cannot be entirely controlled, and could have serious financial implications in the event that a problem does occur and a claim is filed against you.
This is why liability insurance should always be part of a business insurance package, as it can help protect you from damages and defense costs that result from any property damage or bodily injury caused by your company. Here’s what you need to know when purchasing liability insurance.
Something as simple as a puddle or water could make you liable for significant damages.
Recent case shows how a tiny mistake can have huge consequences
Some business owners tend to underestimate the importance of being covered for liabilities, yet a lot of incidents can come at a high cost. A case that came before the New South Wales District Court in early 2016 demonstrates the potential impact of liability. In 2010, the plaintiff slipped and fell on a wet floor outside the premises of a restaurant, and subsequently sustained injury to her shoulder, back, arm and wrist.
As a result, she took the case to the District Court and made a claim for compensation. The court deemed the restaurant to have been negligent due to a lack of signage highlighting the wet areas and attempts to mop it up. The plaintiff was awarded more than $350,000 in damages to compensate her for future economic loss because of medical expenses and an inability to work.
This case is a stark warning for businesses, as it shows how such a tiny factor as a puddle of water could lead to a loss of hundreds of thousands of dollars in damages to the victim. Risk can come from anywhere, and should be taken seriously no matter how small.
Liability risks come in a variety of forms
According to Safe Work Australia, slips and trips like these cause thousands of injuries every year in Australia, and thus are a significant concern for businesses. However, these hazards can take many different forms. besides those related to your premises as in the case above. For instance, it can be a result of product malfunction or a mistake by one of your workers that causes harm to a person or property. Maybe there are negative implications to some advice your gave, or your management activities lead to an omission, error or breach of authority.
It’s important to note that the business landscape is always evolving, and you must be aware of any emerging risks that could threaten your operation. For instance, the rise of cybercrime can pose a serious threat to your information and the privacy of customers and clients. Because of this, many organisations are focusing increasingly on ways to protect themselves from the new threats and the financial implications that can come from victims making a claim.
Assess the risks that affect your business and look for an insurance package that can give you the right protection.
Guarding your business from liability
So what can you do to protect your business from liability? First off, it always pays for you to take steps to manage areas of risk to your company. But as the aforementioned slip and fall incident proves, you can only do so much – some factors are outside of your control and mistakes can always happen.
This is why it’s essential to have cover for liabilities in your businesses insurance package. This can include a variety of types of cover, including professional indemnity and management liability. The team at MGA Insurance Brokers can help you to assess the requirements of your business and come up with a package that will give you the protection you need for all insurable liability risks.