Third-Party Liability Insurance
Third-Party Liability insurance means that the first party, the party with insurance, is protected against claims from the third party, which could be any member of the general public but is usually a client in business. These claims are statements from a person that alleges they were physically injured or that their property was damaged as a direct result of the services from the company, and in return, want their medical treatments reimbursed or destroyed personal possessions replaced.
Sometimes, these claims can result in litigation battles whereby money is also required for legal fees. Third-party liability insurance can be divided into several covers, which protect the insured party and financially aid them with these expenses.
If you would like to read more information or learn more about the pricing of business insurance, you can do so here.
What is Third-Party Liability insurance
As aforementioned, third-party liability insurance can come in different types. Public liability insurance is one of the most common types, as it can be utilised by companies in any industry, from cosmetic to construction. Insurance companies usually offer between £1 million to £10 million worth of insurance to businesses because the payout can be costly when considering the costs of legal representation, intense medical treatment or replacing expensive property to begin with.
In contrast, the average yearly public liability insurance costs £120, magnifying just how cost-efficient applying for it is. The usual types of claims this cover deals with are when employees of a company accidentally damage a customer’s house, for instance, painters that get paint on the furniture or couriers that knock down decorations when delivering furniture.
More severe claims include those where a third party is injured, for example when a client visits a nutritionist in their office and trips over some steps or is harmed by unstable fittings.
Product Liability Insurance
Product liability insurance is a form of third-party liability insurance that concerns businesses that sell items like stock or ready foods, whether purchased or given away for free as a tester. Usually, this means shops, supermarkets, cosmetic artists, restaurants and any other company known for selling merchandise. Whilst the intent is to make a profit and gain customers, sometimes businesses unintentionally sell expired, faulty or dangerous items and do not realise their error.
Nevertheless, they would be held liable if this product for any reason physically hurt another person causing bodily injuries, or destroyed their property. For instance, this could be a furniture shop selling fairy lights with a faulty wire that causes a fire and damages the buyer’s home, resulting in an expensive lawsuit that could cause the business to fail.
Likewise, any food shop that accidentally left expired products on the shelf and gave the consumer food poisoning would be responsible for paying medical treatment and reimbursing the buyer for their pain. Product liability insurance covers these expenses.
Professional Liability Insurance
Professional liability insurance (otherwise known as professional indemnity insurance) is specifically targeted for businesses that could cause a third party substantial financial loss due to one slight professional mistake, which would consequently lose them time and revenue. Such third-party insurance is beneficial to contractors like architects, translators and interpreters, teachers and health coaches, as they are the primary professions dealing with essential projects or personal matters.
For example, suppose a teacher would teach the wrong syllabus or educate their pupils incorrectly. In that case, this could cost many pupils their exams and lead them to fail, affecting their future options and opportunities. Likewise, if a marketing agency were to advertise the contact information of one of their clients on many billboards over town but get the number wrong, this would cost their client lots of money and even a lawsuit. Professional liability insurance covers these unfortunate mistakes.
Commercial Auto Insurance
Many companies use cars during their workday to get to clients, pick up materials, drive to project sites or even do deliveries. As this is the peak time for traffic-related accidents, employees need to be insured on the vehicle they are driving in, as expenses in regards to cars or vans are expensive and stressful. Premiums vary massively on this insurance because they depend on many factors:
- The make and model of the vehicle
- The use of the vehicle (business or business and leisure)
- The number of people insured
- The claims history
However, it is cost-effective compared to the average cost per year in the UK, which is £118.
Third-Party Liability Insurance
In short, third-party liability insurance is a strategy adopted by companies to ensure that they suffer little-to-no financial loss when there are claims filed against them. They come in many different types, but the most common are public liability insurance, product liability insurance, professional liability insurance and commercial auto insurance.
Find out more about the importance of insurance here.
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