Why Your Business Needs Public Liability Cover

Why is public liability insurance so necessary for a business? Well, I came across a tale of a public liability claim that ideally illustrates what could happen if a business neglects to cover themselves for this kind of thing and what the consequences could be.

This story is about a company that did an installation at a grain store where the grain is stored in enormous vats, called silos. Part of that installation was putting sensors in each silo. These could be used to monitor things such as humidity, temperature and so on. The purpose being to keep the grain fresh and prevent it from germinating or going off over the long periods it would be stored for. Unfortunately, one of the subcontractors forgot to connect up the sensors properly in one of the silos. The mistake wasn’t discovered for nearly two whole years, and of course, all the grain in that silo was past saving by that point. The total stock of that silo had been ruined for some time.

Grain silos are large objects. Very large. A single silo can store anything up to several thousand tons of grain for the very biggest, and certain several hundred tons for smaller ones. That amount of grain represents a lot of money, or in this case, a sizeable loss. The grain store decided to sue the firm that did the installation, holding them culpable for this loss.

The amount in question ran into millions of dollars and the company could have very easily been bankrupted by this amount, closing the business and leaving it’s employees jobless with no income, all because of a simple mistake by one man. Fortunately, the business owners had the foresight to cover themselves against such events by taking out a public liability insurance policy.

All legal correspondence was forwarded to the company’s insurer who then took on the responsibility of communicating with the grain owners and going through due process for establishing negligence. As it was established the company had been at fault, a figure for compensation was worked out and then paid on behalf of the company, without them having to foot what was an enormous bill.

The last point worth taking away, is that the legal fees involved in defending a claim, whether liable or not, are paid for by the insurer. With legal fees being quite costly, even when a claim has no basis, the financial damage caused by having to pay legal fees can still be considerable, which is unfair, but does make public liability insurance look good value.

Matt Withers is Commercial Manager for Coversure Insurance Services. For a business insurance quote or more information about business insurance, please visit our site.