Liability Insurance is designed to protect you in the event that you are sued by a member of the public or by an employee.

There are various different types of liability insurance:

• Public Liability
• Employers Liability
• Product Liability
• Professional Liability Insurance

The concept of liability insurance is that if your company causes a member of the public or a company any damage and they sue you due to your negligence liability insurance will cover the cost of compensation to the third party.

Liability insurance all boils down to negligence, if a you are found to be negligent in any way for any action which you have taken or even the failure to take reasonable action to prevent a claim from happening then you could be sued in the event of an accident.

The UK has seen a sudden surge in liability claims due to an increase in no win no fee companies and also due to raised awareness of individuals rights.

Public liability insurance will cover you in the event that a member of the public is injured and the accident is deemed to be your business' fault.

The definition for public liability insurance is as follows:

1. The insurance of liability for accidental bodily injury or damage to the property of third parties.
   
   
2. Public liability insurance is designed to compensate you in the event that you are sued by a member of the public or company where they feel they have suffered a loss as a direct result of your actions or those of your employees.
   
   
3. An example of how a public liability claim could arise is if a customer walked into a shop and fell over on a wet floor, and there was no visible sign of warning to the customer.
   
   
4. In 2002 there was approximately £3.5billion paid out in public liability claims.
   
   
5. With premiums starting from as little as £5 per week there is no reason a business should operate without public liability insurance.
   
   
6. In the event that your business is sued by a member of the public or company and you are ordered to pay compensation to them then you could lose your business, home, cars and any other assets that you may have.

Employers liability insurance will cover you in the event that an employee is injured or dies, and you are sued for negligence.

The definition for employers liability insurance is:

1. Insurance by employers in respect of their liability to employees for injury or disease arising out of and in the course of their employment.
   
   
2. Employers liability insurance is basically designed to cover you in the event that you are sued by an injured employee. In the event that an employee is physically injured or dies then you could be sued for negligence.
   
   
3. Employers liability claims could arse in a number of different ways here are a couple of examples of how employers liability claims arise:
   
   
   • An employee is spraying paint on to a car that they have just fixed, the employer has no signs up or has given the employee any instructions that he is meant to wear any safety equipment. After 3 years of working at the garage the employee becomes ill due to the fact that his lungs are infected by the gas from the paint. The employer would be sued for thousands of pounds as they were negligent in the fact they did not ensure there was adequate safety measures met.
     
     
   • A office worker is carrying a filling cabinet up a flight of stairs and falls over and breaks their leg. They could sue the employer as they were not shown how to lift heavy items

Product liability insurance will cover your business in the event that any goods that you supply cause injury, illness, loss or damage to a member of the public.

The definition for product liability is:

1. Insurance against the liability of a producer, supplier, tester or servicer of goods for injury to third parties or loss of or damage to their property caused by the goods.
   
   
2. Here are a couple of examples of how product liability claims could arise:
   
   
   • Electrical Appliances, if they are faulty and cause a fire the third party could sue under the product liability insurance.
     
     
   • Food Sellers, if you are a cafˇ and the food produce you have bought is contaminated and you give 50 people food poisoning, the product liability insurance claim will be high.

Although you may think the liability must fall on the manufacturer, your right if you can prove that the product was manufactured faulty which could prove difficult to do. If the manufacturer goes bankrupt then you will not be able to claim the money from them at all.