The Best Way to Minimise Public Liability Risks

Public liability threatens the profitability of all kinds of businesses. It’s hard to know when your business might be sued for causing accidental injuries or damages to someone’s property.

It’s worth taking steps to prevent these risks! This Budget Insurance blog covers events that might lead to public liability lawsuits and the methods you can use to minimise them. You’ll also learn about one kind of business insurance you need for public liability. 

Importance of preventing public liability risks

Which business does not interact with its customers or the public? All businesses, even those that operate 100% online, interact with people, like customers or suppliers, in one way or another. An online business, for instance, interacts with its customers by providing them with products or services.

Every business faces public liability risks due to this interaction. A customer might claim you’ve sold them a defective product that injured their child and sue your business. Defending yourself can be costly and bring your business the wrong attention and reputational damage. 

It makes business sense to protect your venture from the many liability risks. Here are some good reasons for reducing these types of risks. 

• It protects people. It follows that your business wants to protect people if they are hurt or injured on your premises. 

• Avoids legal liability: Liability risks can result in expensive lawsuits, settlements and medical bills. These would reduce your bottom line and threaten the survival of your business.

• Maintains a good reputation: If no one sues your business, it’s unlikely to suffer severe negative publicity. A good reputation is a sure way to attract new clients, leading to your business growing and making more money. 

• Compliance with local and international regulations: Reducing liability risks allows your business to adhere to regulations. Keeping on the right side of the law and adhering to mandatory industry regulations is definitely the right choice for business survival. 

Common public liability risks

Your business faces many public liability risks, including

• Slips and falls: These risks increased by more than 50% from 2016 to 2018 in South Africa. A slip, trip or fall occurs when a person loses balance on a slippery surface or trips due to an uneven surface or some obstacle, falls and is injured. 

• Accidents involving motor vehicles: Your vehicle may cause an accident that leads to property damages or injuries to the other driver, passengers or pedestrians. The aggrieved party may sue you, leading to costly legal processes and settlements.

• Product liability or defective products: Sometimes, mistakes result in a defective product being handed over to the client or consumer. If the product injures or harms their health, you could face a liability claim.

• Damage caused by contractors: You may hire a contractor who fails to perform proper safety measures and puts people or property at risk. For instance, a contractor building a tar road in the streets of a township, village or urban area may inadvertently damage someone’s home or property wall. That could result in the aggrieved homeowners suing you for damages. 

• Injury caused by animals: If your business owns livestock, you may be exposed to liability risks. For instance, an animal you own might eat a third party’s crops, trample on their garden or cause a road accident. Some animals can cause severe injury or even death to a third party.  

7 Ways to reduce public liability risks

Lawsuits are expensive and can tarnish your business’s image and reputation. You can minimise the chances of being sued by third parties by reducing liability risks. Here are seven methods that can help you do this effectively.

1. Training of staff: You hire the most competent employees and provide them with the tools they need to work. Then, you let them carry on with their duties, right? Doing this could expose you to potential third-party lawsuits. There are probably activities in your business that employees may not know well. As a result, they could make costly mistakes.

Always ensure every employee gets trained on all safety aspects and operational processes in your business. Most importantly, ensure that each trained employee signs to confirm that they have received the training. When you change a business process, train your staff about it. This is a crucial part of the next activity that reduces liability risks.

2. Risk assessment: You can’t eliminate risks until you first identify them. Once you’ve identified the risks unique to your business, you can implement a plan to manage or minimise risk. A method used to identify and mitigate risks is called risk assessment. It usually involves relevant business stakeholders, like auditors and possibly, third-party experts, to be effective.

Review your business risk assessment so that it stays current and enables you to catch any new or missed hazards.

3. Record-keeping and review: Keeping records effectively protects yourself if someone sues you. It’s, therefore, important to keep records of your interaction with clients and any safety measures you take. Make sure that you review these records to keep things up-to-date, where applicable.

4. Safety standards and regulations: All industries have minimum safety regulations that every business must adhere to. For instance, all industries are required to follow the Occupational Health and Safety Act[1] to protect both employees and third parties. Failure to take measures as prescribed could lead to liability claims.

5. Perform regular maintenance: There are many items that a business owns that need regular maintenance. Think about the business’s vehicles, fire extinguishing equipment, pumps and overhead cranes. Failure to perform regular maintenance could result in a breakdown when you least expect it.

The problem is that the breakdown could lead to an accident that injures someone or damages third-party property. For instance, if you are in the logistics business, your truck’s brakes may fail, causing it to hit someone’s vehicle or a pedestrian. The injured third-party might sue you for damages or injuries.

6. Conduct safety audits: Not all the business activities you do earn you money but they are nevertheless essential. This is particularly true in the case of conducting safety audits. Such activities can easily skip your attention and expose you to liability risks.

Failing to perform safety audits means the number of risks faced by third parties and your employees increases. For instance, if you are constructing a client’s building, you could miss an area that needs barricading. A pedestrian might walk past the area and trip on items like wires or bricks, resulting in an injury. 

7. Adequate insurance cover with Budget Insurance: After doing all you can to prevent public liability risks, an unhappy client may sue you. Without protecting yourself from lawsuits like these, you put your business at risk. Your best bet is to get public liability insurance to cover things like legal expenses, to cover expenses if you do face a third-party claim. Discover more about the difference between public liability and professional indemnity insurance. 

Public liability insurance 

Your last line of defence to protect your business after taking preventive measures is public liability insurance.

This insurance protects businesses if they cause injuries to a third party or damage their property. 

Many businesses are required to have public liability insurance cover before they are awarded contracts. In other cases, the law may require liability insurance. Various factors contribute to the scope and amount of liability cover needed, including

• Claim history

• Industry or business vertical 

• Risks covered

If your business is sued due to causing third-party injury or damage to their property, liability insurance will cover legal costs, settlements, or compensation. Your business is covered, provided the incident is accidental, not intentional or the result of negligence or an unlawful act.  Without it, your business’s profit potential could receive a hit. In the worst case scenario (depending on the claim size), you could even go out of business.

Get public liability insurance from Budget Insurance

If you want to protect your business from third-party liability claims, getting public liability cover is a wise move. It’s easy to do so from Budget Insurance. Go online and request a free and no-obligation quote. Get your business protected for it to thrive.

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Sources:

[1] Labour Guide

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.