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What is a liability policy?
During the ordinary course of business accidents can happen, where an accident occurs which is not reasonably foreseeable and causes damage to the property of another party or causes injury to a person, (other than an employee of a business which is usually covered by workers compensation), the business may be found legally liable for the injury or damage. The injury or damage may be caused by any number of exposures a business will face every day, it may be a customer on your premises, it may be you conducting business at another premise that is not your own, it may be in a public place, it may be from a product that you have manufactured, sold or supplied.
A public and products liability policy will protect you from the financial risk associated with these types of claims. For a claim that is covered by the policy, the policy will pay the costs to investigate, defend or settle such claims and will also cover the cost of compensating the injured party.
What is public liability?
Public liability is a term used to describe liability to the public, that is, any third party to your business. It is sometimes defined in a policy as follows: “Public Liability means your legal liability in respect of personal injury or property damage or advertising injury happening in connection with the business…… other than Products Liability”
What is product liability and how does it differ from public liability?
The term product liability is introduced for the purpose of applying a limit during the period of the policy for claims which are caused by a product of the business.
“Product Liability means your legal liability in respect of personal injury or property damage caused by or arising out of any products or the reliance upon a representation or warranty made at any time with respect to such products; but only where such personal injury or property damage happens after physical possession of such products has been relinquished to others”
What is considered a product will be defined in the policy and is usually anything manufactured, sold, constructed, erected, installed, grown, treated, altered, modified, repaired, serviced, bottled, labelled, handled, sold supplied, resupplied, distributed, imported or exported by your business and includes the packaging, labelling, advice, warnings given or omitted in connection with any products.
A liability policy will generally be issued with two limits – one for public liability and one for products liability.
A policy will usually cover all claims made during the period of the policy up to the specified limit, e.g. $20,000,0000 for any claim for public liability for an unlimited number of claims. Claims for products liability will usually be covered up to an aggregate limit – meaning all claims arising from products cannot exceed the limit issued e.g. $20,000,000 during the period of insurance. Once claims that arise out of products liability reach that limit, the policy will not pay any more claims.
CGU offers a comprehensive range of insurance cover for small businesses including public and products liability cover. Speak to you insurance adviser to get the cover that it right for you. Visit cgu.com.au to find an adviser.