What Are The Different Types Of Liability Insurance

Wondering if your business needs liability insurance? Unless you're working in isolation or in a completely automated environment, the answer is likely to be yes. You see, whilst the human touch is what tends to differentiate great businesses from good ones, the reality is that human error is almost impossible to avoid. However, with the right type of business liability insurance in place, you can go a long way towards mitigating the repercussions of any kind of slip-up, enabling your organisation to avoid reputational and financial damage in the process.

So what exactly is business liability insurance and why is it important? Essentially, this specific form of insurance aims to indemnify an organisation or professional against any claims that might arise as a result of neglect, errors or erroneous advice. For instance, if a tax attorney were to provide inaccurate advice and find themselves facing a liability claim from an unhappy client, this type of policy would kick in and offer protection against any arising dispute. The same goes for an employer facing claims from staff as a result of an injury sustained in the workplace. Whether or not said injury was a direct result of human error or neglect, a comprehensive liability insurance policy would essentially protect the policyholder in the event of ensuing legal action.

Business liability insurance is also critical for those supplying products and services to the public. As we've seen all too many times in recent years, a minor production error can result in enormous reputational and financial damage to both small and large enterprises. As they say, to err is human, and as such, making provision for an inevitable error is much more than just a nice-to-have.

Depending on the nature of your business, there are various types of liability insurance that are best suited to your needs. From small service providers to multi-national producers, every type of enterprise should consider a form of business liability insurance, as even the smallest oversight can come with costly consequences. Here's a breakdown of the most essential forms of cover to consider based on the scope of your enterprise.

Broadform Public Liability Insurance
This comprehensive form of commercial liability insurance is highly recommended for any employer that engages with the public, as it enables you to protect yourself, your employees and your business against any third-party claims connected to your day-to-day business activities. Essentially, this type of cover offers protection in the event of any injuries incurred by third parties as a result of a product or service offered, as well as any damage incurred to their property during the course of their engagement with your business.

Many shops, restaurants, hairdressers, builders and contractors tend to opt for this type of cover, also known as business insurance for contractors, as they are typically more exposed to the public, and they know just how high the price of a simple human error can be.

Automatically included in this form of cover is an employer's liability insurance policy, which is also a legal requirement for most businesses employing staff. Should a staff member injure themselves, fall ill or sustain damage to their property whilst on the job, this cover would automatically kick in and cover any ensuing claims, thus protecting your organisation against potentially crippling financial setbacks.

Find out more about MiWay's Broadform Public Liability Insurance Cover here.

Product Liability Insurance
This form of insurance, which provides cover in the event of claims made arising from defective goods, is typically sought out by businesses that supply products to the public, Essentially, should your product or service offering be found wanting for any reason, or cause unexpected damage to the recipient, this type of insurance would make provision for ensuing legal action or claims made against you.

Defective Workmanship Liability Cover is also included in MiWay's Product Liability Insurance and is a form of cover that can prove critical in the event that any error or omission is detected by the client once work has been carried out. Another key addition to the MiWay offering is the inclusion of Work Away Cover, which extends the scope of your insurance to cover you outside of your registered business address. This can turn out to be especially useful for those who regularly conduct off-site work.

Find out more about MiWay's Product Liability Insurance cover here.

Professional Liability Insurance
Giving incorrect advice can cost you dearly at a professional level, especially if you're working in a highly specialised field like accountancy or architecture. However, in a pressure-cooker work environment, it's easy to lose a document or to make calculation errors, which is why this type of business insurance is critical for a range of professionals, including bookkeepers, accountants, tax consultants, real estate agents and architects.

For example, this type of cover would prove essential for an accountant who calculated the amount of VAT owed to SARS incorrectly, and would thus be covered for resulting penalties and interest. Equally, an architect whose drawings were lost in a municipal office would be covered for an amount of up to 5% of the total indemnity thanks to this specialised type of insurance designed with professionals in mind.

Also known as Errors and Omissions Insurance, this type of business liability cover protects you against some of the real risks associated with providing inaccurate advice or making omissions during the course of your career. In addition, the policy offers protection against defamation claims, lost or damaged documents as well as fee recovery.

For example, should an aggrieved client elect to withhold fees as a result of a perceived error, Professional Liability Insurance would also cover the legal expenses incurred in contesting such an action.

Over and above this, this highly specialised form of insurance makes provision for errors committed as a result of subcontracting. So, if an accountant were to refer a client to a tax advisor who then proceeded to provide incorrect counsel, they would not be liable for any arising claims made by a third party.

MiWay's Professional Liability Insurance is primarily aimed at those requiring a qualification to practice his or her chosen profession. Given the variety of different specialisations covered in this form of cover, it's important for potential and existing policyholders to understand the terms thoroughly and ensure that this type of insurance makes provision for their particular risk profile. MiWay's consultants are always on hand to provide advice and to explain the various intricacies of the product.

For more information on MiWay's Professional Liability Insurance, click here.

Directors & Officers Liability Insurance   
This type of insurance policy specifically designed to protect directors and officers against third party claims made to their personal assets. This cover will be launched soon by MiWay Business Insurance.

Running a company is a risky business, primarily for those with large staff contingents or those involved in sensitive fields, and as such the importance of liability insurance shouldn't be underestimated. Not only can the right type of cover go a long way towards mitigating any reputational risks, but it can also offer up a lifeline in the event of unforeseen errors, which tend to have a way of happening when we least expect them.

If you don't currently have any form of business liability cover in place or are perhaps considering extending your cover due to evolving business needs, now is the time to act. To find out more about our business liability products, get in touch with us today on 0860 64 64 64 for an obligation-free quote, and rest assured that your assets are in good hands.

MiWay is a licensed non-life insurer and Financial Services Provider (FSP 33970).

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