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Protect against the negative effects of liability
There are few things more stressful, or potentially financially damaging, than being held legally liable for damage to property or to an individual. In cases where the individual pursuing a claim is successful, businesses may have to pay out for personal compensation, medical compensation, and legal compensation. As a small business owner, you may think that such a circumstance could never apply to you but worst case scenarios do sometimes come true, so it is worth planning for them well in advance.
If you want to protect yourself against the costs which could arise from an individual making a claim against your business, you will need to look for liability insurance, which will provide some level of protection. There are different levels of cover for you to consider prior to making a final decision:
• Employers’ liability: this will cover the costs which may arise if employees are injured at the workplace or suffer an illness as a result of employer negligence. You will not need this level of cover if your company is not a limited company or if you choose to employ just close family members.
• Public liability: this will cover costs which arise if damage is inflicted upon a member of the public and it is your fault or the fault of your company. The premium will depend upon what kind of company you own and several other factors. This type of cover can be complex, so it is worth seeking financial advice for small business owners before making a decision.
• Product liability: if your company gives away anything physical, it must be fit for use and you will be responsible for any damage which occurs as a result of this product. Even if you did not manufacture the product yourself, you may still be liable and could end up having to pay out a large sum of money if you do not seek proper cover. Please note that this kind of cover will not provide protection in the event that you have knowingly made an inferior or unsafe product.
Other levels of cover do exist, such as directors’ and officers’ liability insurance and the type you choose will depend heavily upon the nature and size of your company. Whatever option you choose, remember that the minor financial hassle of purchasing insurance for small businesses could save you a fortune in the long-term.