Why do I need business liability insurance?

Many business owners often ask if they need to purchase liability insurance and what for. What sort of liability insurance cover do I need and what’s the difference between the different types of liability insurance cover for New Zealand businesses?

Accidents happen

If your business does work on customers’ sites, such as giving quotes or installing your products, you’ll create an exposure. This can be as simple as spilling paint on a customer’s carpet or dropping a tool on their prestige vehicle parked in the driveway. If customers leave their goods with you for repair, or if your goods injure your customers, you will be held liable if those goods are damaged while in your custody or faulty when repaired. In many cases, even if it’s not your fault, you will still need to investigate and defend your business. Whether you are liable or not, your business will incur costs in defending any potentially expensive action brought against you.

If you have purchased public and products liability insurance (or often referred to as general liability insurance), your insurer will pay the investigation costs and will engage an appropriate and experienced legal team to defend any action against your business.

We live in a litigated world where higher standards of behaviour and compliance with laws and regulations are expected of New Zealand businesses. Breaches of laws and regulations can lead to court cases, fines and penalties. Costs can range from investigating the cause, preparing to defend allegations, appearing in court and escalating to any fines or penalties imposed by a court. These actions are not usually covered by public liability insurance and product liability insurance, but by statutory liability insurance cover.

While public and products liability insurance will cover your business, it won’t cover your employees. While many personal injuries are covered by Accident Compensation legislation, employees do retain the right to civil action when a workplace injury is not covered by ACC. This can include mental injuries not accompanied by a physical injury, nervous shock or fright (which can often cause heart attacks and strokes) and diseases brought on over time such as by chemical poisoning and exposure to the elements or extremes of temperatures. Our employers liability insurance cover will protect your New Zealand business and compensate your employees where successful actions are taken by them against your business.

Should I purchase it?

If you own a business that employs staff, advertises products and services and where customers come to you or you go to customers, then liability insurance should be considered. Likewise, be careful not to expose your business to expensive claims if you sell, install or repair products. At Insure Online, we take the guess work out of how much liability insurance to purchase. Our public and products liability insurance provides three options - $2 million, $5 million and $10 million limits of indemnity. For statutory liability insurance and employers liability insurance, we provide a standard $1 million limit of indemnity for each. Do you really want the risk of running your small business without it?

Visit www.insureonline.co.nz

Brendan Tobin - Founder of Insure Online and experienced insurance professional with over thirty years of insurance experience.