Do I need Public Liability Insurance?

[scstock]

I'm surprised there's a debate over this. I would have thought public/products liability insurance for ANYONE supplying products would be essential. It's not a legal requirement. It's also nothing to do with the company assets.

So how much cover is correct - £1m, £2m, 10m??

 

[DEBS Ltd]

We were told employers' liability insurance was mandatory (2 directors no employees) when we were trying to get quotes on professional indemnity insurance.

We were not looking to get public liability insurance as we work from home and have no interaction or client visits, the business sells software and we service over the phone or remote support, etc.

However, we got the Public liability insurance as part of the employer liability insurance deal as it was included in the package/price offer and would not have made any difference to the price if we asked for it to be taken off.

Public liability up to £1,000,000 and Employers liability up to £10,000,000 for slightly under £300 per annum.

Everything you were told is correct.

Employers' liability is mandatory where you have employees. Assuming this is a limited company we're talking about.

Insurances are often packaged and, at that level, those will be minimum premiums. Given that there wouldn't have been any saving.

 

[DEBS Ltd]

So how much cover is correct - £1m, £2m, 10m??

It's impossible for me to answer that.

Really you have to think of what your maximum potential liability could be.

£5M is very common these days but only you can decide.

In a serious case £1M/£2M could be just the legal fees.

 

[WaveJumper]

I am slightly surprised those clients you are dealing with don't insist on the level of cover you should have especially if suppling equipment that is used in a public place. In my previously life in the commercial property arena (shopping centres and retail parks) I would not have touched anyone with less than 10m cover. And using a broker / company which has your back when the sh....t hits the fan in my view is a must.

 

[Frank the Insurance guy]

Do you give advice on your products, like installations or anything like that? If you do, and some numpty blows themselves up wiring it in, if you don't have PL how will you pay for your defence? Or pay out if there is liability? Just being able to wipe the company out and leaving someone disabled or widowed is that really how business is done?

Providing advice is actually a completely different class of insurance called professional indemnity.

The example you give above would be excluded by a public/products liability policy.

@DEBS Ltd - That is so wrong! Are you in insurance? From what you say, anyone who provides instructions on how to install, or set up a product needs Professional Indemnity Insurance, which is nonsense! - If you buy a light switch from the DIY Store, the instructions are wrong and you injure yourself, that is a Products Liability Claim, not Professional Indemnity! Same applies if you buy flat pack furniture and you have instructions to install it - any injury or damage caused would be covered by Products Liability cover.

Professional Indemnity Insurance is to respond to claims of a Financial Loss, not Injury or Physical Damage! Professional Indemnity is usually needed where a business is charging a fee for providing a professional service.

 

[Newchodge]

Employers' liability is mandatory where you have employees. Assuming this is a limited company we're talking about.

Isn't there an exception if the only employees are close family members? Or does that just apply to sole trader employers?

 

[Frank the Insurance guy]

Isn't there an exception if the only employees are close family members? Or does that just apply to sole trader employers?

The family member exception doesn't apply to limited companies.

 

[DEBS Ltd]

@DEBS Ltd - That is so wrong! Are you in insurance? From what you say, anyone who provides instructions on how to install, or set up a product needs Professional Indemnity Insurance, which is nonsense! - If you buy a light switch from the DIY Store, the instructions are wrong and you injure yourself, that is a Products Liability Claim, not Professional Indemnity! Same applies if you buy flat pack furniture and you have instructions to install it - any injury or damage caused would be covered by Products Liability cover.

Professional Indemnity Insurance is to respond to claims of a Financial Loss, not Injury or Physical Damage! Professional Indemnity is usually needed where a business is charging a fee for providing a professional service.

I'm talking about advice in general Frank.

There is a clause in most PL contracts that excludes it.

Yes, I'm in insurance.

It it's error/omission from advice then yes. I'm not disputing what you're saying. I'm also not saying what you're alluding to above.


"Providing advice is actually a completely different class of insurance called professional indemnity."

That's what I said.

Below is a standard advice exclusion within a policy wording

"Professional advice 6. designs, plans, specifications, formulae, diagnoses, prescriptions, directions or advice prepared or given by you."

What's wrong about what I've said?

Yes any sort of injury arising from the incident would be the product but if there were any loss through advice given then insurers could refuse to cover a claim based on this exclusion.

 

[macScot]

Everything you were told is correct.

Employers' liability is mandatory where you have employees. Assuming this is a limited company we're talking about.

Insurances are often packaged and, at that level, those will be minimum premiums. Given that there wouldn't have been any saving.

Yes, a limited company with 2 directors now earning a salary so we registered for PAYE, but no other employees are employed as yet.

 

[DEBS Ltd]

Yes, a limited company with 2 directors now earning a salary so we registered for PAYE, but no other employees are employed as yet.

It's a daft one as you're unlikely to claim against yourself but that's the law.

 

[Frank the Insurance guy]

I'm talking about advice in general Frank.

There is a clause in most PL contracts that excludes it.

Yes, I'm in insurance.

It it's error/omission from advice then yes. I'm not disputing what you're saying. I'm also not saying what you're alluding to above.


"Providing advice is actually a completely different class of insurance called professional indemnity."

That's what I said.

Below is a standard advice exclusion within a policy wording

"Professional advice 6. designs, plans, specifications, formulae, diagnoses, prescriptions, directions or advice prepared or given by you."

What's wrong about what I've said?

Yes any sort of injury arising from the incident would be the product but if there were any loss through advice given then insurers could refuse to cover a claim based on this exclusion.

My concern was that this is a public forum and anyone providing advice may see your post and think they are not insured for providing advice - per the example you gave.

Its a good example to forum members that there is no substitute to actually speaking to an Independent Broker who can provide advice based on their specific circumstances and needs, and not a generalisation on a forum.

As you know Insurance policy wordings can vary widely - as an example, Chubbs exclusion on a PL policy I am looking at excludes: "Advice arising out of the provision or failure to provide any instruction advice information or professional service in return for a fee" - ie. if no fee is charged for the advice, it would be covered by the PL policy.

Again - a real world example of why everyone should really speak to their broker to be clear on what is and isn't covered by their own policy.

 

[DEBS Ltd]

My concern was that this is a public forum and anyone providing advice may see your post and think they are not insured for providing advice - per the example you gave.

Its a good example to forum members that there is no substitute to actually speaking to an Independent Broker who can provide advice based on their specific circumstances and needs, and not a generalisation on a forum.

As you know Insurance policy wordings can vary widely - as an example, Chubbs exclusion on a PL policy I am looking at excludes: "Advice arising out of the provision or failure to provide any instruction advice information or professional service in return for a fee" - ie. if no fee is charged for the advice, it would be covered by the PL policy.

Again - a real world example of why everyone should really speak to their broker to be clear on what is and isn't covered by their own policy.

That's not actually what you said though, you attacked immediately saying "That is so wrong!".

It wasn't actually wrong. Could it have been worded better? Yes.

I've worked in insurance for 25 + years but it's not actually what I'm here for. Looking to move out of the insurance world not further into it but happy to pass on advice when I'm here if the question arises.

 

[scstock]

A very satisfactory conclusion for me on this matter - I have accepted a significantly cheaper quote via Frank the Insurance guy and yes, it does include Public/Product Liability.

Happy Christmas!

 

[xjr13m]

The equipment blowing up and destroying a house?

I thnk technically that would be Products Liability insurance?

 

[siangana]

Public liability insurance covers the cost of claims made by members of the public for incidents that occur in connection with your business activities. Public liability insurance covers the cost of compensation for: personal injuries. loss of or damage to property. death.

 

[IanSuth]

As you know Insurance policy wordings can vary widely - as an example, Chubbs exclusion on a PL policy I am looking at excludes: "Advice arising out of the provision or failure to provide any instruction advice information or professional service in return for a fee" - ie. if no fee is charged for the advice, it would be covered by the PL policy.

Again - a real world example of why everyone should really speak to their broker to be clear on what is and isn't covered by their own policy.

Frank,

Just as this intrigues me, how would this work in the case of my wife's company. Their tech support line has 2 numbers. One is a free phone number for those with a support contract, the other is a higher rate number for those without a support contract - is that still advice provided for a fee ?

 

[Frank the Insurance guy]

Frank,

Just as this intrigues me, how would this work in the case of my wife's company. Their tech support line has 2 numbers. One is a free phone number for those with a support contract, the other is a higher rate number for those without a support contract - is that still advice provided for a fee ?

Assuming it is IT based tech support, whether a fee or not it would not usually be covered by a public liability policy - check your policy as it is likely to have an exclusion for professional services or professional indemnity.

Note - public liability covers physical loss or damage and personal injury - it does not cover a pure financial loss. (Claims for financial loss are covered by professional indemnity insurance)

If this is tech support following a physical product sale, I would expect loss damage or injury caused by the advice to be covered under the public or product's liability cover but it really does depend on what the policy wording and exclusions say.

As to whether charging a premium rate number constitutes a fee, I have no idea (I've never been involved in a claim where this is the case) - this would be a legal issue. Ie. Does the fact that customers are paying extra constitute a charge on the customer and therefore a contract for the advice provided on the call?

I would ask how much do they earn from the higher rate calls. If insignificant, for the avoidance of doubt I would stop the higher charges. From what I understand it is usually difficult to hold someone legally liable for free advice.