Public liability insurance is a type of business policy that covers numerous types of third-party damage. It protects business owners from the financial consequences of legal liability for personal injury or property damage to third parties. 

A successful claims settlement programme protects your company's reputation and compliance with contractual obligations, significantly increasing the chances of future opportunities. It also ensures that the business remains financially protected in the face of unexpected costs and meets industry standards. 

Read this article to learn about public liability insurance in detail, including its need, eligibility, and more.

What Is Public Liability Insurance?

Public liability insurance is a type of commercial insurance that offers the policyholder terms of legal liability for accidental injury to property, damage, or bodily injury caused to a third party. Its purpose is to protect businesses from the cost of compensation claims and associated legal costs. 

Most often, the coverage also applies to occurrences arising on business premises, in operations, and as a result of products or services sold by the policyholder.  

Public liability insurance is an indispensable commercial coverage option for businesses to protect themselves from the financial implications of third-party claims in India. 

A report published by the Insurance Regulatory and Development Authority of India (IRDAI) mentioned that in the financial year 2020–21, the size of the public liability insurance market in our country stood around ₹1,500 crore, with a year-on-year growth rate of at least 8.7%.

Why Do You Need Public Liability Insurance?

Business facilities, irrespective of whether they are small or large, face the risk of third-party liabilities. As implied by the term, even a small event, such as a customer slipping and falling on your premises or having a falling signboard hit a person passing by, can result in staggering financial expenses.  

Public liability insurance is designed to ensure that it protects customers and the general public, thereby providing you with a safety net that will ensure that there are no financial accidents that can take place. 

Eligibility Criteria For Public Liability Insurance

Public liability insurance is typically advisable for any business that comes into regular contact with the public in India, such as retail stores, healthcare practitioners, hospitality businesses, and professional service companies. 

Eligibility standards can differ from one insurer to another. Still, the nature of the industry, level of risk, and reputation for making claims are some common elements taken into account in deciding whether a renewal is accepted as-is or with an increased cost. 

According to the IRDAI, businesses that have an annual turnover of up to ₹5 crore are eligible for this. 

Types Of Public Liability Insurance

Here are some types of public liability insurance policies.

1. Public Liability Insurance (Industrial Risks): This policy is intended for manufacturing units and warehousing that are under industrial risk.

2. Public Liability Insurance (Non-Industrial Risks): This policy is for non-manufacturing businesses like hospitals, retail outlets, schools, IT companies, BPO clubs, and other service-oriented organisations. 

Besides these major types, there are some popular public liability insurance policies in India: 

• Legal-Liability Insurance: all legal liability for accidental bodily injury or property damage caused to third parties. 

• Product Liability Insurance: This insurance covers the policyholder’s legal liability arising due to any damage done through products or services produced by the insured.

• Professional Indemnity Insurance: This option available for professionals such as doctors, lawyers, and consultants protects the insured against liability arising due to their professional error or omission.

How To Buy the Best Public Liability Insurance?

When purchasing public liability insurance, questions such as the maximum coverage of each policy form, premium costs, and settlement history of the firm are all important considerations. Getting quotes from several different companies will help you find the best combination of coverage and cost. 

Conclusion

No matter what type of company you operate or how big it is, public liability insurance provides an essential safety net. Once you understand the most important components, benefits, and things to consider for this form of protection, any company owner can choose wisely to safeguard their business risks and other penalties.

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