Potential liabilities for a business

Every business has to protect itself from a variety of instances involving everything from accidents on the job to natural disasters and fires. Without the proper protection you leave yourself and your business exposed to legal and financial problems that could easily put you out of business. Business insurance is a necessity in the UK and many types are required by law in order to run a business. Employer liability insurance, or commonly known as just liability is required by law and is needed to protect your investment from injuries and illness to employees and the public that may occur in the course of doing business.

In accordance with UK law, you are required to have at least £10m in employee liability coverage for bodily injury, illness or disease that may happen during the course of business. In the course of doing business just about anything can and will happen, so you also need at least £5m in public liability for loss or damage to people other than your employees, and in many cases more will be required. Even if this wasn't required by UK law, liability insurance is protection you cannot be without. If an employee is injured on the job it is a serious matter regardless of how minor it may seem at the time. You need the peace of mind of knowing that you can not only get your employee taken care of properly, but also that you and your business will be protected legally and financially throughout the entire process.

Public liability is basically the same as employee liability, but directed at those people that do not work for you. Some obvious applications are retail and restaurants, due to the direct contact with the public throughout the course of doing business. Everything from slips and falls to fires and lighting strikes can occur at any time, and if your business is not sufficiently protected you may be responsible for more than just your loss.

Almost all businesses have some direct contact with the public from transporting items to the point of sale, and there can be problems, accidents and malfunctions at any point along the way. Defective and malfunctioning products are just some of the inherent risks of doing business, and in most cases manufacturers and shipping companies will carry their own coverage. In the event the manufacturer goes out of business, you could be held responsible. Public liability is a must and in particular cases you may be required to carry extra public liability coverage depending on your unique situation. Items like computer software, tools and machines are prime examples of higher risk needs. Defective software can damage systems and cause costly downtime, tools and machine parts can malfunction and damage more than just that part, and consequently require more liability protection.

A common misconception with business insurance is that employee theft or malicious behavior is covered under most liability plans. While these aspects are covered in some policies, in most cases you will need a separate policy or special terms added to cover this. Running a business can be a real challenge, and one of the biggest unknown factors are employees. Even the smallest business sooner or later will bring in new people, and even the most thorough screening process can fail at times. A disgruntled employee has the potential and resources to seriously damage your business from the inside, and not addressing the possibility leaves you exposed.

Some other aspects of UK business liability coverage are the protection of professional indemnity and key man cover. A business can become a target of malicious attention for any number of reasons, and in most instances it turns out to be unwarranted. Regardless of the situation, you need consider the possibility of legal action against your business. From disgruntled customers to former employees, or even conspiracy theorists, there will be times when someone may attempt to sue your business for financial damages. Without insurance you may lose your business and end up in deep debt professionally and personally. In some situations a key figure in the company may be the target like CEO's, company spokesmen, owners and more. In these cases, key man coverage is used to provide some extra protection for those positions in the company that are known to be vulnerable to these situations.

Many different types of liability insurance exist, and what is right for your particular situation will vary. The most important things are to make sure you are in compliance with all the UK laws, and that you are carrying the proper amounts and right types of protection for your business.