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Liability Insurance

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What is liability insurance cover?

Liability Insurance

Liability insurance is a type of coverage that protects individuals or businesses from the risk of being held legally responsible for damages or injuries to another party. It encompasses various policies including public liability, professional indemnity, statutory liability, cyber liability, and more

Why would someone need liability insurance?

Protection from Lawsuits

In today’s litigious world, lawsuits can arise unexpectedly. Liability insurance can cover the costs associated with defending against claims and potential settlement fees.

Maintains Business Reputation

A quick resolution to potential claims or disputes, facilitated by liability insurance, can prevent damage to the business’s reputation.

Financial Safety

Liability claims can have significant financial consequences. The insurance ensures that such unexpected costs do not cripple the business or individual’s finances.

Key types of liability insurance 

Public Liability

This policy covers common small business risks including bodily injuries, customer property damage, and advertising injuries. It’s required for most commercial leases.

Best For
  • Business Accident Coverage
  • Third-party Damages
  • Legal Cost Protection

Statutory Liability

This cover is a type of protection that helps people or small businesses cover costs if they accidentally break certain laws or regulations.

Best For
  • Unintentional breaches protection
  • Legal costs
  • Fines and penalties

Professional Indemnity

This coverage protects small businesses from financial losses if they make mistakes or are accused of negligence while doing their job. 

Best For
  • Negligence claims 
  • Errors & Omissions 
  • Professional mistakes 

Cyber Insurance

Insurance that helps protect individuals and small businesses from financial losses caused by cyber-related incidents, like data breaches and computer attacks.

Best For
  • Ransomware attacks
  • Phishing scams 
  • Cyber extortion 

Employers Liability

This insurance helps protect small businesses from financial losses if an employee suffers injuries or illnesses at work.

Best For
  • Workplace injuries
  • Legal expenses
  • Compensation payments

Employment Disputes

This insurance in NZ covers legal costs and other expenses arising from disagreements between employees and their employers.

Best For
  • Mediation costs
  • Legal expenses
  • Settlement fees

Management Liability

Management liability insurance in NZ shields company leaders from legal and financial risks due to their managerial responsibilities.

Best For
  • Directors liability 
  • Employment disputes
  • Legal defence

How does liability insurance work?

  • When a claim is made against an insured party, the liability insurance steps in to investigate the claim.

  • If the claim is valid, the insurance can cover the legal costs and any settlement or compensation, up to the policy limits.

  • The insured might have to pay a deductible, which is a predetermined amount, before the insurance coverage kicks in.

How Can You Do It Right?

  • Evaluate Your Risks: Understand the specific risks associated with your consultancy field. This helps in selecting the right coverage amounts.

  • Stay Updated: Laws and industry standards evolve. Regularly review and update your insurance to stay relevant.

  • Seek Expert Advice: Engage with professionals, like insurance brokers, to guide you in making informed decisions.

What are the advantages and disadvantages?

Liability insurance comes with its pros and cons. 

  • Financial Security: Protects against potentially massive legal claims.
  • Peace of Mind: Businesses can operate knowing they are covered against unforeseen legal claims.
  • Attractiveness to Stakeholders: Many clients and partners prefer or even mandate businesses to have liability coverage.
  • Cost: Premiums can be high, especially in industries perceived as high risk.
  • Policy Limitations: Some policies might not cover all scenarios or might have caps on payouts.
  • Possible Complacency: Some businesses might become lax in their operations, wrongly thinking their insurance will cover all issues.

Common Misunderstandings

  • “All Risks Are Covered”: Not all policies cover every conceivable risk. It’s crucial to understand the exclusions.

  • “Higher Premiums Mean Better Coverage”: A higher premium might just reflect higher risk, not necessarily more comprehensive coverage.

  • “I’m Too Small to Need It”: Even small businesses can face large liability claims. Size doesn’t negate the need for coverage.

How can Gerrards help?

  • Expert Advice: At Gerrards, we specialise in business insurance in New Zealand, understanding the unique risks and regulatory landscape.

  • Tailored Solutions: Every business is different. We ensure you get a policy tailored to your specific needs.

  • Claim Support: Should the need arise, Gerrards is there to guide you through the claims process, ensuring a smooth experience.

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