Understanding which insurance products your business requires can be challenging. With an ever-growing list of offerings, picking those best suited to your needs requires an increasingly sophisticated understanding of the insurance market and the kinds of insurance products on offer. In this blog post, we’ll delve into liability insurance, one of the essential insurance policies for builders. We’ll explore the ways in which this insurance policy is designed to protect builders against claims of property damage or personal injury and provide a comprehensive overview of the core elements of public and products liability insurance. If you’re a commercial builder, tradesman, or subcontractor, then this article will equip you with the basics you need to start making informed choices about how you cover your business.
What is Liability Insurance?
We’ve all heard of, and most of us have a tangential understanding, of liability insurance. Essentially, liability insurance is a kind of insurance that protects individuals or businesses if they cause injury to a third party or damage someone else’s property.
But how does this work within the context of the building and construction industry? Liability insurance provides essential cover in an environment rife with inherent risks. Liability insurance protects builders, construction workers, contractors, and sub-contractors from suffering severe financial losses in the case of accidents or damage, including that caused by negligence. As builders are typically required to guarantee that their works are insured for the duration of the construction project (and usually, a period after), liability insurance is an essential and unavoidable facet of working in the Australian construction industry.
Public Liability Insurance
Imagine that you are carrying out construction work on a site and a member of the public walks by and trips over some building materials. They fall and injure themselves, and as this occurred on your site, you can now be held liable if they opt to sue. How will you fund the expenses associated with the following legal battle? How will you manage to pay out-of-pocket compensation to the injured individual? How will this impact you, your business, and your employees? This is where the importance of public liability insurance becomes starkly clear. Public liability insurance can help protect your business by covering legal costs, and the compensation awarded to the damaged party.
Products Liability Insurance
Products liability insurance protects builders against any legal claims for injury or damage caused by their final products. This means that this kind of insurance protects you against claims from third parties whereby they have become injured or had property damage caused by what you have built. If a product that you have sold, supplied or built causes injury or property damage to a customer or third party down the track, you may be held liable for the damages even if you completed the project years earlier.
Imagine that you finished constructing a house with a beautiful tiled roof. However, some of the tiles delivered to the site were defective and were still installed. Several months down the line, the client finds their home flooded, and significant damage is caused to the property.
How can you ensure that you protect your business from the inevitable financial consequences of legal fees and compensation?
That’s right- with products liability insurance. This insurance will cover the costs of the legal proceedings, and the cost of compensation as well. Legal fees and repayments that come as a result of lawsuits can be devastating for businesses, and ensuring that you have the peace of mind that you are protected is well worth the cost of cover.
But the benefits of products liability insurance don’t end there- this type of cover can also help you win contracts and clients. Most clients and homeowners only seek out builders with appropriate cover, as this indicates that they approach their work with seriousness and if the worst occurs, it’s more likely that the claim will be handled smoothly leaving them with less headaches to deal with.
Liability insurance doesn’t cover everything!
Liability insurance is important, and any business that operates in the construction industry should be ready to undertake the investment. However, it’s essential that builders understand that public and products liability insurance doesn’t cover all types of liabilities.
Builders may need additional insurance coverage depending on their business operations and the types of projects they undertake. For instance, builders may need professional indemnity insurance to protect against claims arising from their professional advice or services.
Take the stress away from worrying if your current insurance policy is providing the correct insurance your business needs and speak to Be Covered Insurance Brokers to obtain a personalised insurance solutions that fit your unique needs. With our personalised service built for the trades and construction industry, you can trust us to protect what matters most. Give us a call for your obligation free quote on (08) 7092 2242.