Contractors, tradies, and small business owners face many risks in their everyday operations. The greatest risk, however, is the risk of lawsuits arising from claims of negligence, errors, omissions, and failure to provide the client with full or accurate information among other things. Disgruntled clients, employees, suppliers, and members of the public can decide to take you to court for one reason or another, whether warranted or not. To protect yourself and your business from the risk of lawsuits, be sure to visit publicliabilityaustralia.com.au to learn more about public liability insurance and buy a suitable policy.
How a Lawsuit Can End Your Business
i) High Legal Fees
If you are a small business owner, you probably have limited resources and a low credit limit with lenders. When a lawsuit is filed against you, the high legal fees may force you to use your working capital, apply for a loan and borrow wherever you can to sort out the legal fees. If the case drags out for several months or years, the legal fees may become unaffordable. The costs can run down your business and force you to close the shop. The good news is that with public liability insurance, small business owners and contractors like you will have a lifeline. This is because the insurance company will pay all the legal fees whether you win the case or not.
ii) Compensation
At the end of an injury lawsuit, the court will have to decide whether the claims are merited or not, and award the compensation demanded by the plaintiff. Depending on the nature of the case, the compensation can be in the hundreds of thousands or millions of dollars. Since you cannot afford to pay the compensation, your business assets may have to be liquidated. When you have public liability insurance, however, you can expect the insurance company to pay the entire cost of the lawsuit, including the compensation awarded by the court. This means that your business can continue running normally whether or not the lawsuit is successful.
The Importance of Public Liability Insurance
As noted above, public liability insurance will pay legal fees and other costs associated with injury lawsuits. However, that’s not all. Having public liability insurance is a basic requirement for contractors. A contractor cannot be prequalified for a job if they lack this type of insurance policy. This is because clients want to be assured that they will not be exposed to unnecessary risks after hiring a contractor.
Factors to Consider When Comparing Public Liability Insurance Policies
1. Liabilities Covered
When buying public liability insurance, you must confirm that the policy covers the full legal fees and compensation awarded by the court. The policy should also cover all other costs that are related to lawsuits. The policyholder should not dip into their pocket to cover the cost of the suit in any way. Before choosing a given policy, therefore, make sure it covers all the abilities you want. Be sure to read the inclusions section to get the right information about your policy. You may also need to go through the exclusions to find out what your policy does not cover.
2. Coverage Limit
The liability coverage limits of the policy must be taken into consideration. This is because you are looking for a policy that offers sufficient coverage. If similar lawsuits have cost $1 million to defend, be sure to buy a policy that offers at least $1 million in liability coverage. This will help to ensure you are sufficiently covered. A competent insurance broker can tell you exactly how much liability coverage you should carry, so be sure to also consult the experts.
3. Cost of Premiums
Premiums usually vary from one policyholder to the next as well as from one insurer to the next. Since you want to get value for money. Be sure to compare the premiums charged by different insurance companies to identify the most affordable insurer. When comparing costs, however, be sure to also pay attention to what the policy covers as well as the coverage limits. This is the only way of ensuring you’ll get a policy that offers the best possible value for money. During the search, you should exercise some patience to ensure you make an informed decision.