Why SMEs Should Consider Public Liability Insurance?
Malaysian public liability insurance is extremely important
for a business, regardless of whether it’s a retail business or an
administration office. When SME owners open their doors to the public, this
naturally opens up them up to the possibilities of potential liability for a
slips, falls and accidents. This is where public
liability insurance could really provide a cushion for any curve ball
damages or losses of customers that need to be compensated.
What is Public Liability Insurance?
Public liability insurance is
extremely important for the above businesses simply due to the high level of
exposure to the public. Also known as business
liability insurance, this insurance is essentially an insurance policy that covers damages or injury of
the customer or client as a result of your business activity with them. This
could involve a customer slipping on a wet floor at one of your business’s or
poor lighting resulting in someone falling down a staircase.
Conditions like these as well as worn out carpeting, narrow winded
stairs and faulty electrical wires are just a few examples of situations that
could cause customers injury or damage.
Another example of negligence caused by a business owner could take place in a hardware
store. If a can of paint were to fall on to the ground, and caused a customer
to slip and suffer an injury, the customer would have the right to sue the
hardware store under the basis of damage due to negligence.
The list goes on for the possible types of public liability
claims, which is why public liability policies
should be considered no matter the size of your business. For a third party to
hold you responsible, the main requirement is to prove negligence on the part of the
business owner.
Public liability insurance
extends to covering the legal action cost and compensation
claims if a case made against your business is lost. This happens when
and if a third-party is injured due to negligence that happened in your
business premises.
For example;
(a) Beauty
saloons. If hair straighteners that were left switched on have incidentally
burnt your customers, and thus causing bodily injury, you are technically
liable as negligence falls on you.
(b) F&B such as Restaurant and Cafes. These trades have a
high level of exposure to public. Public Liability Insurance covers you in case
of being sued due to bodily injury or third party property damage.
Purchasing Business Liability
Insurance in Malaysia
Malaysian public liability policies generally cover three
areas of risk.
(a) Premises/
Office Risk:
Commonly purchased by business owners, this policy covers
third-party bodily injury or third-party property arising out of business
operation such as offices, restaurants, trade office, etc.
(b) Contract Risks:
When a contractor is awarded a contract, it is stated in the
clauses of the contract that the public liability
must be purchased by the contractor for a certain amount, be it as a separate
policy or add on in Section 2 of the contractor all risk policy. A majority of the time, the
contractor all risk policy would absorb the cost of insurance premium of
Section 2 of the public liability policies.
However, certain cases such as mall renovation for a certain
outlet requires two different insurance policies to start the project. In this
instance, the cost of renovation of an outlet is RM 40,000.00 while public liability coverage required by the mall
operator would usually be at least a Million Ringgit.
(C) Premises and Operations including Work Away Risk
This type of public insurance is applicable to air-conditioning
maintenance companies or companies in the similar line of works. It is
important that the policyholder inform the insurance company of any new
locations added to the policy for it to be an effective coverage. For example,
if an air-conditioning maintenance has been done at a client location, then the
maintenance company is liable in the event of any bodily injury or property
damage incurs due to the defect in the air conditioning maintenance program.
How can Public Liability
be purchased?
(a) Premises/Office
Risk
The company would need to fill up an application and/or proposal
form based on the nature of business, in order for the insurance company to
proceed with the insurance coverage.
(b) Contract Risks
The contractor would need to present the letter of award from the
principal company that states the requirements of the public
liability sum insured of the project. An insurance cover note would then be issued accordingly for
presentation to the principal company for the immediate start of contract
works.
(C) Premises and Operations including Work Away Risk
Apart from presenting a complete proposal form, the insured would
also need to present the company profile, technical profile and etc., of the
works done in order to get a good rate from the insurance company.
Below are a few scenarios where public liability insurance is
claimable:
- You leave a box lying on the floor in your shop
and a customer trips over, thus causing an injury;
- Your employee spills a drink in a café and a customer slips over this,
thus causing an injury;
- A customer falls down a flight of stairs in your
factory because the handrail is broken, thus causing an injury;
- Whilst carrying out some carpentry repairs at a
client’s office, you leave a plane on the floor that causes an employee to trip
over, thus causing an injury that leads to a damage claim against you;
- If a tile drops of a roof that your company is
repairing drops, and causes a death to a passer-by because sufficient care had
not been taken by your employees to secure them; or,
- You knock over a valuable antique when carrying
in a carpet you are fitting at a customer’s home.
Generally, the claim process for public liability insurance is
similar to other insurance claims processes involving a claim form, a police
report when required and an incident report.
Additionally, Malaysia public liability cases are often comprised
of court cases since bodily injury claims are involved. It is of utmost
importance that once a third-party makes a claim either for bodily injury or
through a lawyer, the client would need to inform the insurance company
immediately. By doing so, the insurance company would appoint a lawyer to
represent them.
Back