Owning a business that interacts with the public often requires public liability insurance to safeguard against litigation. Retail stores, bowling alleys, ice skating rinks, and restaurants should all carry this type of coverage. Public liability is part of a commercial general liability (CGL) policy.
What is public liability insurance?
As part of CGL, public liability insurance protects your business against claims due to injury on your property. The policy pays for the hospital bills of individuals who suffer injuries or illness while visiting your property. It protects against premises liability claims, as it pays for legal costs.
Businesses can get sued for different reasons, so it’s important to carry the right coverage. Many small businesses enroll in a Business Owners Policy (BOP), which includes public liability insurance in the general liability portion. It’s important to remember that different insurers offer different plans, so it’s good to be clear on what your plan covers. What a basic plan lacks can usually be supplemented with endorsements, which are add-on coverage plans.
Who is covered under public liability insurance?
Any member of the public who is injured on a property covered by public liability insurance is entitled to benefits. It can be a shopper in your store or someone curious about your business.
However, this type of insurance does not cover employee claims, which should be covered by workers’ compensation. It also doesn’t protect business partners, investors, or independent contractors. Professionals expected to be at your establishment should be covered by separate plans.
Let’s say you own a parking lot, and a kid on a skateboard flips over a bump in the ground, gets injured and has to be taken to the hospital. Who pays the bill? Chances are, your public liability insurance will cover the kid. That’s an example of an accident you might not anticipate but is still covered by the plan.
Not every business needs to worry about public liability insurance, especially if you work remotely and don’t advertise your business. However, if you have a physical storefront where the public is invited, it’s important to carry this coverage.
For whom can you be held liable?
As a business owner, you have a responsibility to provide a “duty of care” to the public. An individual might accuse your business of negligence if it does not meet certain “duty of care” safety standards. Here are the types of people that the business owner must be responsible for:
- Invitee: A visitor to your property requested by personnel.
- Licensee: An individual with permission to visit for their own purposes.
- Trespasser: A visitor who lacks permission. You must still avoid wilfully physically harming the individual.
What about trespassers?
Trespassers must be treated with the same dignity as visitors who have permission to be on your property. You can warn them you’ll call the authorities. It helps to have a “no trespassing” sign on your property to ensure your public liability insurance covers the case.
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