Is your Public Liability Insurance adequate?

Most businesses would not operate without a Public & Products Liability policy – But do they have the right cover? Insurance is like most things in life in that you only get what you pay for – In many cases the cheapest policies are not the right option and taking the wrong policy could result in a financial disaster for a business if it does not provide adequate cover.

In simple terms a Public & Products Liability policy provides cover for claims brought against a business where a Third Party has suffered Bodily Injury or Property Damage from their products, services and operations. The policy can only respond if the loss is a result of a negligent act by the policy holder – i.e. It needs to be legally liable.

The important words here are:

•  Bodily Injury

•  Property Damage

 The policy will only trigger if a Third Party suffers Bodily Injury or Property Damage.

 For example:

Bodily Injury – A member of the public enters the policy holder’s factory and slips on some sawdust which has been left on the factory floor.

Property Damage – A policy holder is moving some timber on an unregistered forklift and backs into a customer’s car.

 These above are examples of straight forward claims.

However, what would happen if a Merchant was asked to supply a certain grade/type of timber and after it was delivered was found to not meet the specifications?

As you will see from the “important words” above there is no Bodily Injury nor is there any Property Damage and as a result the Public & Products Liability policy cannot respond.

The builder is annoyed as there is a hold up on the project which will result in an economic or financial loss for them. Therefore, they take action against the Merchant for recovery of their financial loss. As detailed above the standard Public & products policy will not cover pure economic or financial loss claims only and as such there is no protection under a standard policy.

MGA TMA has an arrangement with AB Phillips who have a solution for this and similar scenarios depending on the exact circumstances. AB Phillips have an option where MGA TMA members can extend their Public & Products Liability policy to claims for Financial Loss. This is an exposure for members that they probably do not currently have cover for and it is examples like the one above where it is vital for Members to have adequate insurance protection.