Third Party Liability exposures affect organisations of all sizes and are anything that can lead to legal and financial responsibility for injury, damage or harm to a third party.

Exposures come from the work performed and where that work takes place, including any activities, events or other business-related circumstances or interactions which could result in harm to a third party.

Common Types of Liability Exposures

There are several types of liability exposures that can affect a business but with the correct systems in place and robust insurance in place, the impact of these can be greatly reduced. The following are five possible loss exposures which could affect a business:

Occupier’s Liability – The risk an organisation faces if a customer or client is injured on the premises, for example, if they were to trip and hurt themselves. Businesses that are particularly at risk are those requiring customers or clients to be physically present, such as retail stores, pubs and restaurants.

Employer’s Liability – The risk an organization faces if an employee becomes ill or is injured whilst carrying out their work. This also includes former employees who later become ill as a direct result of their ex-employer’s negligence exposing them to harmful substances or processes.

Products Liability – The risk a business faces because of manufacturing, distributing or selling a defective or unsafe product.

Professional Indemnity Liability – The risk a business or individual faces when certain errors are made during business operations. This can include professional negligence, breach of professional duty, errors or omissions and civil liabilities. Any one giving design or advice is at risk.

Director’s and Officer’s Liability – The risk a director or officer personally faces for wrongful acts undertaken in pursuance of their duties. For example, when a business enters administration and the appointed Administrator determines the director is at fault for increasing the creditors losses beyond a reasonable position.

Potential Consequences of Liability Exposures

Organisations may face a variety of consequences in the event of a liability loss, such as:

  • Damages – If an organisation is deemed responsible for a loss by a court, they may be held financially accountable for paying damages to the harmed or injured party.
  • Legal Defence – An organisation may have to pay legal defence costs in association with the claim and even if successful these costs may not all be recoverable from the third party.
  • Reputational damage – Organisations reputations may be harmed if they are involved in public liability losses.

Business Liability Insurance

There will always be risks associated with liability loss exposures no matter how careful an organisation is. Therefore, purchasing business liability insurance is the best way to protect any business.

Policies are designed to cover organisation’s liability claims for all of the risks covered above. Exposures vary from business to business so for further guidance on how to best protect your business please get in contact with a member of our staff.

For More Help

For more information on third party liability exposures or any other insurance questions, please contact Bullerwell & Co Ltd today!