All business entities have some or the other form of risk. These risks are not limited to financial risks, but also include the risk of injury to workers, liabilities raised by customers or any liability for which the policyholder is due. With a commercial insurance plan, it helps to ensure safeguard against these various kinds of risks. However, this insurance cover does not include any intentional damages, criminal prosecution, and other contractual liabilities.
Commercial general liability insurance is the one that protects the individual stakeholders and the business organisation against the risks for which they may be held liable. To simplify, any third-party loss or damage for which the business may be expected to compensate is covered under this insurance cover. This policy includes legal as well as financial liabilities until found to be intentional.
The necessity of commercial insurance plans
Mitigating risk is necessary, be it personal life or professional. Similarly, every business entity is required to have some kind of backup plan to insure against the various risks that might have not only financial but also a legal impact. Any mistake on part of the insured organisation for which a third-party suffers a loss, a commercial insurance plan can act as a safeguard. Thus, any risk to the public at large or even the customer or clients due to products of the business entity are covered under this insurance cover.
Now that you know why it is essential to invest in a commercial insurance plan for your business, let us look at the types of liabilities covered under it.
Not all organisations face the same business risk. Since different organisations cater to different needs and requirements, they face varying degrees of business risk. Here are some of the common liabilities covered under a commercial insurance plan –
Public liability cover
This policy is specifically designed for those organisations whose products or services are used by all. Liability may arise on the insured entity due the claims raised. With a public liability insurance cover in your commercial policy, you need not worry about such claims. Retail shops, clubs, shopping malls, theatres are some examples of businesses that are advised to have a public liability insurance coverage.
Employer liability cover
Employees are the backbone of all organisations. Without them, the management efforts do not get translated into actions. Having an employer liability coverage aids in not worrying about the amount that may be due to employees due to accidents or injuries during the course of their employment. This also acts as a safeguard for compensation payable under the labour laws.
Professional liability cover
Other than business organisation are professionals that provide services. But oversight may happen, and it can result in a liability on the professional. To safeguard against such liabilities, a professional liability cover is designed for medical practitioners, architects, engineers, lawyers, chartered accountants and for other services that need protection of their business interest against neglect, errors or omissions in professional capacity.
Third-party liability cover
The most commonly required business coverage is a third-party cover. Here the insured organisation is the first party whereas the insurance company is the second party. The third-party is any person who raises a claim for compensation on such business organisation. Any liability payable to a third-party as a result of the business organisation is covered under this type.
Make sure to pick and adequate business insurance policy to safeguard your organisation’s financial and legal interest. Based on the business risks, this assessment needs to be done. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.