The importance of having Liability Insurance Cover and prevention is better than cure.

John Bourke of NTI/Thompson explains the importance of Liability Insurance Cover to THJ readers.

Claim costs in Ireland are very high versus other jurisdictions in the EU, and a third party claim could cripple a business that does not have insurance cover. Even if a claim is not valid or needs to be defended, a business can still incur considerable costs.

Any business that employs staff, allows the public on to their premises or sells tangible products need the following cover;

• Employers Liability
• Public Liability
• Products Liability

I will go in to these areas individually.

Employers Liability

The definition of an employee is very broad but basically any person working with the business is deemed to be employed by the insured under a contract of service or apprenticeship. This includes volunteers, persons on work experience and even sub contractors and persons supplied by them. The standard limit of indemnity for Employers Liability insurance is €13,000,000 any one incident and unlimited in any one period of insurance.

The standard form of Employers Liability policy charges a premium based on wages expenditure though some policies, known as package policies, include the cover automatically.

Public Liability

This cover provides protection in respect of a legal liability incurred following injury to a third party and/or damage to their property. Most policies will factor in “work away” risks such as collection and delivery and additional services a retailer may provide such as the fitting of floor coverings or installation of electrical equipment.

An important extension of cover is the inclusion of wrongful arrest or defamation following an incorrect accusation of shoplifting or detention. This is quite a common occurrence and most insurers provide the cover automatically. Readers should check their policy and if cover is not provided, it should be requested. On occasions, third parties have staged what appears to be an act of larceny but when challenged have rid
themselves of the item that had been taken, and they duly sue the shop proprietor.

It is very important to note that a customer should not be stopped, even if theft is suspected, until they have gone past the last point where they could pay i.e. they must be exiting the premises or be outside.

Products Liability

This cover is an extension of the Public Liability policy and provides indemnity in respect of legal liability incurred following injury to a third party and/or damage to their property arising out of a defect in goods sold or supplied. A perfect example would be a grocer selling stock that is beyond its sell by date which resulted in a third party being ill.

The limit of indemnity will be the same as the limit under the public liability section but, unlike public liability, is restricted to that amount in any one period of insurance.

In the case of HAI members, most items sold are proprietary and branded with no interference by the retailer. However, if a customer is injured using a defective item sold to him or her, the solicitor’s first port of call will be the retailer whose insurer will deal with the claim by defending it or by settling it and seeking recovery from the retailer’s suppliers.

That gives a brief overview of the liability insurance available, however, even with cover, prevention is better than cure and I list below some simple steps which can help present third party claims;

• Comply with all health and safety legislation and regulations
• Identify potential hazards both to members of the public and to staff and also identify controls and improvements that can be implemented to reduce risk
• Ensure all employees are fully trained in the use of equipment related to their job
• Provide manual handling training for all staff
• Provide personal protective equipment
• Check work areas and shop aisles for trip hazards such as discarded boxes, stock falling from shelves etc.
• Have a clear procedure in place for dealing with spillages
• Keep all hazardous machinery away from unauthorised personnel and members of the public
• Ensure stock on shelves is secure and that any items likely to cause injury are well out of the reach of children
• Maintain flooring and floor coverings in good condition, thus reducing the likelihood of trips and falls. On wet days have mats at the door and well inside the premises to avoid people slipping because of wet shoes.
• Have staff aware of inherent dangers to themselves, their colleagues and members of the public and encourage them to take remedial action when they see an obstacle in an aisle, a wet floor or some other potential hazard.

Having liability insurance is vital for any business, but doing everything possible to avoid claims is very important. Ensure you have adequate liability cover by contacting your insurer or broker and reflect on the work that is carried out at your business and ensure the cover you have is sufficient to meet your needs.

This Business Support article featured in the January/February 2019 edition of The Hardware Journal.