subject: Public Liability Insurance For Small Business [print this page] In today's business environment, any small business operating without adequate liability insurance cover is sitting up and begging for trouble. And guess what? As sure as God made little green apples, it will find them.
To operate any business today without having all the insurance coverage needed to cover yourself against litigation costs, has the likelihood of the owners not only losing their business but also many personal assets like their home. When things go wrong, they can go horribly wrong.
Today all Australian trade contracting businesses are required to carry liability insurance and can't even quote any Government job unless they show proof of a $5,000,000 liability insurance policy attached to their tender papers.
Builders can't start building until financing has been approved and part of that approval from some financial institutions includes the applicants presenting a certified copy of Builders Insurance to guarantee that the work they start has the financial means in which to complete the job. Perhaps this requirement could be a disincentive for people building a new house instead of buying an existing house, but over the years there have been too many new home owners left stranded because of builders going belly-up.
Builders going into bankruptcy is nothing new over the years, but over the past 18 months some well known and previously well respected big building firms have declared bankruptcy. Yes, this is no doubt part of the global financial meltdown, but it has been expensive to prospective new home owners and insurance companies alike.
Any retail outlet operating a small retail shop in a shopping centre or mall, trading without public liability insurance to cover the general public, is dicing with danger. In Australia, most shopping centres require all tenants to carry public liability insurance which includes the name of the shopping centre owners name to be included on the policy to protect them against any claims made. This now forms part of some commercial tenancy contracts.
Due to the rapidly rising cost of insurance today, many business people have cut back on the amount of cover in their public liability insurance policies. This may cut operating costs down marginally but is it the wisest thing to do long-term? It really just depends on what type of retail or service business you are in, what you are cutting back from and going to, and what the hazards are of your business.
If it is a retail outlet in a shopping centre, then any insurance needed is likely to come from an unexpected cause. Whether it is purposeful vandalism from an unhappy and uncontrolled customer or kids using graffiti to make their mark, it will need to be repaired or replaced.
Often a service business will sometimes think they don't carry much risk when it comes to needing public insurance coverage. Suppose you own an employment business where you find work for people. Anyone who walks through your front door could trip on a mat or something a child left on the floor and this caused a person to have a fall. Even though you ran a well designed office and had taken all precautions against possible accidents to staff and clients, it is impossible to notice everything, all the time.
With adequate public liability insurance coverage what you are really doing is protecting yourself financially as well as the general public. Insurance is only needed when things go horribly wrong and often you don't know what these will be until they happen. And then it is too late.
by: Jan Smith
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