Public Liability Insurance
Owning a business or being self-employed can be a risky thing. Even if you don’t think about it in that way, every interaction your business has with the general public is a risk. For example:
- A customer slips and falls in your store
- A guest is injured at an event or conference your business is hosting
- A client sits in one of your chairs and the chair collapses injuring them
- Your store sign falls down and hits a pedestrian in the head
We live in a very litigious society and you face the risk of being sued every single day. Many of these risks have to do with your business premises or the type of operations your business performs. To protect against this, it is recommended that most business carry Public Liability insurance (PLI).
What is Public Liability insurance in Hong Kong?
Put simply, Public Liability insurance protects you if a 3rd party (a member of the public) sues your business alleging that your negligence caused them some type of bodily injury, death or property damage. The most common accident that can result in this type of claim is a ‘slip and fall’.
When you are subject to a legal action, you would notify your insurance company and they would appoint a lawyer to defend you and pay all costs and legal fees associated with the lawsuit. This includes any expenses that you incur in order to assist with the defense such as lost wages from missed work or transportation costs to get to and from court. On top of these supplementary costs, they would also pay for any judgements awarded by the courts against you up to but not exceeding your chosen limit of insurance.
That being said, not everything is covered. Things like pollution, contamination or damages due to breach of contract or professional duty would not be covered under this policy. If you need this type of specialized coverage, we can arrange it for you.
Why purchase Public Liability insurance?
If your business is frequented by members of the public, you work in a public space, or if you work at a client’s location, you would likely need this type of insurance as there is potential for you to cause bodily injury or property damage to a 3rd party.
For example, if you damaged a customer’s floor while installing cabinets in their kitchen, your Public Liability Insurance policy would cover you.
For a lot of small to medium-sized businesses, the effect of needing to pay damages for bodily injury or property damage can have a severe impact on the financial bottom line of the business and the owner(s). Damages awarded in recent years have been so big that it could potentially bankrupt you. With these types of stakes on the line, it makes sense to pay a manageable premium in order to stave off a potentially catastrophic event.
Many business owners also mistakenly believe that if they are careful, they don’t need liability insurance because they will ultimately win in court and be able to recover the money they spent. The problem with this line of thinking is that lawsuits can be expensive. There is also no guarantee that you will win and the cost of defending yourself might be too much for your business to handle.
- Sums you’re legally liable to pay to a 3rd party for bodily injury or property damage
- All costs and expenses incurred for defending any claims against you
- Bodily injury or property damage to you or your employees would not be covered as you’re not technically considered 3rd parties. To get this coverage, you should look at Personal Insurance or Employees Compensation Insurance.
- Professional liability like errors and omissions or medical malpractice claims would not be covered here. To get this coverage, you should purchase some form of professional liability insurance.
How much insurance should I buy?
There really isn’t a recommended number for all types of businesses across the board. There are a lot of things to consider such as the type of business you operate, the types of customers you work with and amounts awarded to plaintiffs in similar lawsuits.
If you choose to work with us on securing Public Liability Insurance in Hong Kong, we’ll help you determine the proper limit of insurance.
How much does it cost?
As with most commercial insurance policies, premiums are determined based on the type of business you run and the limit of insurance you choose.
As you can imagine, a restaurant with table-side flambé service would probably pay a higher premium than an advertising agency where they occasionally take client meetings in the boardroom. There are many insurance carriers that will specialize in liability insurance for certain businesses or that caters to a certain niche. Depending on your type of business operations, you may get better coverage and pricing when dealing with these specialized insurers.
While this coverage is available as a standalone policy, you can usually save money by purchasing it as part of a larger package policy bundled with other essential coverages. For a more detailed quote, contact us.
Public Liability Insurance FAQ
How does public liability insurance work?
Public Liability Insurance in Hong Kong covers you against your liability to third parties for property damage or bodily injury if there is an accident caused by your negligence. If you are sued by a 3rd party, your public liability insurance policy would step in and pay for defense costs and any damages you’re legally obligated to pay up to the policy limit.
Generally speaking, public liability insurance covers a wide range of risks including slips and falls or even damage caused by the poor maintenance of your building.
For example, if a customer slips and falls in your store, they can sue your business for damages. In that case, your public liability insurance would step in to pay any damages you’re legally responsible for. On top of that, public liability insurance would also pay to defend you in court covering expenses like legal fees, court costs, expert witness fees, etc. This coverage alone is worth your insurance broker’s weight in gold because it responds even if the lawsuit filed against your business is frivolous and clearly without merit.
When you receive notice of a lawsuit, you are required to forward the paperwork to the insurance company right away as they’re in charge of your defense. Since the insurance company is paying for damages and court costs, they have full control of your legal case which means they can choose to settle instead of fight in court if they deem it the most economical option.
How much does public liability insurance cover?
It all depends on how much insurance you’ve chosen to buy. Your public liability policy will cover any damages you’re legally obligated to pay the victim(s) up to the policy limit chosen. On top of that, defense costs like lawyer’s fees and court costs are covered as well in excess of the policy limits purchased and without limit.
The coverage for defense costs is an often overlooked part of a public liability insurance policy but it is one of the biggest reasons to purchase public liability insurance as it will respond even if the lawsuit filed against you is without merit.
What happens if you don't have public liability insurance?
Many business owners mistakenly believe that as long as they’re careful, they don’t need liability insurance because they’ll win in court and get the money back.
But if you don’t have public liability insurance and you’re sued by a 3rd party for negligence you would be fully responsible for paying any damages owed and legal fees.
In our increasingly litigious society, this is becoming more and more of an issue every day. Lawsuits are more frequent and courts are awarding higher damages. Even if you do win the case eventually, proceedings can drag on for years distracting you from your business operations and court costs can create a huge financial burden for your business. There’s also no guarantee that you’ll be able to recover court costs and legal fees from the plaintiff suing you.
By purchasing public liability insurance in Hong Kong, you not only have someone paying for damages and legal fees, you’re able to offload the onerous work of handling a lawsuit to an experienced person at the insurance company.
Can anyone get public liability insurance?
Yes, most businesses would be eligible to purchase a public liability insurance policy in Hong Kong. The one caveat is depending on what type of business you run, you could be paying more or be subject to some extra underwriting by the insurance company.
If you’ve been denied public liability insurance coverage before or are having trouble finding insurance at a competitive rate for your business, get in touch with a licensed insurance broker at Trusted Union.
Do I need public liability insurance if I work from home?
Yes and no, it all depends on what sort of business you operate from home. First of all, public liability insurance does exactly what its name would imply – it protects the public (aka. 3rd parties). That means if yourself as the business owner or your employees were to be injured on the premises, public liability insurance would not step in.
Following that, if you’re using it purely as a home office and clients or customers never visit, then you likely won’t need public liability insurance as there would be no “members of the public” or “3rd parties” on premises that could potentially be injured.
But if clients or customers DO visit (i.e. you run a home-based tutoring business), then you would need to buy some public liability insurance as your home insurance policy would not cover property damage or bodily injury caused to people on your premises for business purposes.
How do I get a public liability insurance certificate?
Once you’ve bound and purchased a public liability insurance policy, the insurer will issue you a certificate. If you don’t receive one along with your policy documents, contact your insurance broker and they should follow up for you.
Do I need public liability insurance for a limited company?
Yes. Although your personal liability is limited if you conduct business through a limited company, lawsuits and the cost of mounting a defense can still devastate the business you’ve put years of blood, sweat and tears into building.
Although you won’t face direct personal consequences an expensive legal case can still hurt your business financially if not outright force you do declare corporate bankruptcy.
How much does public liability insurance cost?
Rates vary depending on the limits of insurance you choose and the type of business you operate.
Generally speaking, public liability insurance for an office is going to be cheaper than for a venue that serves alcohol as the level of risk is higher.
To get an obligation-free quote for your specific business, contact a licensed insurance advisor at Trusted Union.
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