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Liability is a risk that is common to nearly every business out there, as there is always a possibility, however slim in some cases, that a business may face legal challenges and lawsuits, which would require funding a legal defence team or paying damages.

Liability insurance, also known as third-party insurance helps to fund the defence and payout to people who are not insured by the policy.

Depending on the business in question, there are typically three types of liability that most businesses either should or in some cases must get in order to safely run a business in the UK.


Employers Liability Insurance

When a business begins to employ staff they must purchase adequate Employers’ Liability insurance, and can even be fined £2,500 every day they do not have the right insurance.

Employers liability insurance, or worker’s compensation, pays compensation to any employee who is injured or becomes ill as a result of the work they undertake for you.

It ensures that money will be available to deal with any injury claims made, as well as covering any legal costs for any action taken against the business or any employee, director or partner in it.


Public Liability

Public liability insurance works similarly to Employers’ Liability insurance, with the primary difference being that instead of protecting against workers filing suit it instead protects against members of the public who make a legal claim.

If something happens at your work that injures a customer, a bystander or damages someone else’s property, the business is liable, even if it does not happen on your premises.


Product Liability

For businesses that produce, manufacture or distribute a tangible physical product to the public, injuries caused by these products are the responsibility of these businesses.

Product liability covers the cost of compensation and the legal costs associated with it.