Public Liability Insurance

What is Public Liability Insurance?

A public liability insurance policy is a type of insurance policy that provides cover for any physical injury as well as property damage caused to the third party for which the policyholder is responsible. It is commonly known as Commercial General Liability Insurance as well, which works as a combination of both Product Liability and Public Liability insurance policies.

For instance, a customer visiting your office slips and breaks her ankle due to a wet floor and the customer has to get hospitalised. In this scenario, the insurance policy will kick in and provide financial coverage for the expenses incurred in the treatment of the broken ankle.

Public or third-party liability insurance is paramount for business owners, hospitals, and even doctors. A liability insurance policy is usually acquired by enterprises or individuals, who might become accountable for legal or financial liabilities, apart from other relevant issues.

Why do You Need Public Liability Insurance?

Public liability insurance in India is specially designed for companies or individuals who may be held legally liable to pay for the injury or other related damages caused to a third party. This is especially recommended for professional organizations like hospitals, BPOs, doctors, and even business owners. For instance, if your faulty product causes damage or injury to someone else, you may be sued for the loss caused.

Moreover, if your business involves the following criterion you need to consider buying PL insurance -

• If you interact with your client on a frequent basis, regarding work
• As a business entity, you get access to any of your client’s assets. Especially for IT professionals, it is advised to be covered by IT business liability insurance
• If you are a representative of your client’s business
• If you are using third-party site for your business needs.

Benefits of Public Liability Insurance

It might not be a statutory legal requirement, but it is a necessary buy to protect the business from a monetary drain arising out of a lawsuit. At any point in time, if your business is sued by a third party, the insurance will cover the entire legal expenses on you. You should consider this insurance if your business comes into contract with third parties on a frequent basis.

You can protect your business from unforeseen events by purchasing a public liability insurance policy that comes with the following benefits:

• Bodily Injury: If any injury is caused to a third party visiting the office, resulting in major damage will be covered by 3rd party liability insurance.
• Property Damage: It covers your business against any basic third-party liability arising from damages that occurred to the property of others.
• Personal Injury: The policy also covers you for an offense like false arrest, wrongful entry, negligence slander, etc.
• Liability Arising out of Advertising Rights: In case your marketing division violates the copyright rule of someone else and liability arises out of this is considered under General liability coverage

• Contractual and Tenant’s Liability: If your business space is rented and any liability arises if you entered into a leased contract, the expenses will be covered under the public liability insurance policy
• Lawsuits, Investigations, and Settlements: in case of a lawsuit against you, the insurance company will bear the expenses of an investigator and attorney, medical expenses if any.

Commercial General Liability insurance or public liability policy ensures that your business takes off without incurring an unexpected financial loss. General liability business insurance assures a safe future for your business by covering almost all types of liability expenses.

Types of Public Liability Insurance

Although the types of public liability insurance in India are not properly defined, in most countries, the following types of public Liability policies are offered:

• Public Liability for Godowns, warehouse or other manufacturing units
• Public Liability for non-manufacturing units such as BOPs, IT firms, Hotels, Restaurants, schools, clubs, etc.
• Public Liability Act - Business units that are dealing with hazardous substances as per the Public Liability Act, 1991

Public Liability Insurance Coverage

The coverage under public liability insurance or third party liability coverage is extended for industrial risks, non-industrial risks, all business units dealing with hazardous substances, etc. to enjoy more comprehensive protection this policy can be extended to cover other legal expenses arising out of

• Natural calamities
• Sudden and Accidental Pollution
• Transportation
• Carriage of treated effluents etc

The list of coverage includes:

• Lawsuits, Investigations, and Settlements: If your business is being sued for any damage caused to a third party, the insurer covers the expenses of investigating officer or lawyer.
• Medical Expenses: In case of an injury to a third party attending your office, the medical expenses will be covered by commercial general insurance in India.
• Damage or injury due to an accident in your premises or from your products, operations, or promotional ads leading to a third-party liability claim will be covered.
• Liability arising due to damage to a third party’s property while visiting your office will be covered

What’s not Covered under Public Liability Insurance?

Public Liability or commercial general liability insurance shall not cover the claims arising under the following situations

• Professional Errors: The insurer will only be covered for liabilities that are arising out of third-party injury, property damage, disability, etc. For any kind of professional errors, you should buy professional liability insurance.
• Business Property Damage: A sudden fire outbreak has damaged the front part of your office. Compensation will be provided only in the case of third party liability damages.
• It also does not cover damages arising out of war or war-like situation
• Any intentional or deliberate damage is out of the scope of coverage
• Damages caused due to Ionizing radiations are excluded as well
• Damage arising out of fines, punitive, penalties, or exemplary damages are not recompensed

How is the Sum Insured Decided for Public Liability Insurance?

While deciding the premium for public liability insurance, the insurers take various factors into consideration. The foremost thing that severely affects the premium of 3^rd party liability insurance is the amount of risk your business is exposed to. Higher the risk, the higher the premium you will pay or vice versa. Other factors include the claim settlement history of the insured, how the insured approaches certain risks, business records, etc.  

How to Buy Public Liability Insurance?

Buying the right type of public liability insurance is imperative. With plenty of policy options and innovative products, it can be a little confusing. Simply start by analyzing your insurance needs. You can also buy it online and make an easy comparison. You can compare the insurers based on their claim settlement ratio, coverage offered, premiums, etc. it is the best way to ensure the right liability coverage.

If not, you can visit a nearby branch and buy insurance offline. You will have to approach the insurance officer and pay the premiums by cash or cheque. Well, whatever mode you choose, just make sure that it caters to your needs and requirements.

How to Raise Claim Under Public Liability Insurance?

There is no standard set for claiming public liability insurance. The claim process may vary from insurer to insurer.

Just ensure you have kept all the relevant documents handy and provide the insurance investigator with the right information. Whenever a liability claim arises immediately inform the insurer and complete the further formalities.

Usually, whenever a claim is registered, the insurer appoints a surveyor to investigate the claim and estimate the damages.

In case of liability, the court decides the liability amount and the same will be settled by the insurance company. This requires all the supporting documents to be submitted without fail. However, a liability claim is completely different from the other claims as it involves the judgement of the court.