Being a business owner is one of the toughest jobs in the world. On top of fulfilling multiple roles and being responsible for your own income and that of your employees, you need to worry about every little thing that might impact your business negatively, no matter how unlikely. For example, you might think your customers are perfectly safe on your business premises or your work will always be 100% without fault. However, things go wrong and when they do, the legal consequences could spell disaster for your business and your reputation.

That’s why we offer Business Liability Cover. No matter if you own a retail store, a consulting business, or offer a professional service such as accounting, 1st for Women will help cover the substantial expenses involved in liability claims against your business.

What is liability cover?

Liability cover is a type of insurance specifically designed to protect business owners. If they are held legally responsible for damage or injury to another person, that person’s property, or if a client suffers financially from a mistake the business owner makes, they will be covered for the costs that may come along.

Here a few examples of when a business owner might need liability cover:

• A customer slips and falls on a puddle of water at a hair salon, breaking a leg. In this case, the customer could sue the hairdresser, especially if there were no signs indicating the floor might be wet.

• A social media consultant accidentally posts false information about a client’s product to their Facebook page. This results in customers complaining about the brand. The client might feel the mistake has cost them their customers – and therefore money – and take legal action against the consultant.

• An engineer incorrectly calculates the weight of the supporting structure of a building resulting in the building collapsing as a result. 

Each of these scenarios could result in legal action. Legal costs in South Africa are unaffordable for most business owners, and the damages awarded could financially cripple even a large and successful business. 

Who needs liability cover?

Any business owner needs liability cover in South Africa. It might seem unlikely that a client or a loyal employee would ever take legal action against you, but it does happen. If you’re a business owner, could you afford millions of rands to protect yourself and your business if you’re taken to court and need to pay damages? If not, liability cover is a must-have.

Also, if you rent an office, your landlord may require you to take out public liability. This will be in the rental contract and may even specify the minimum cover you must have. 

What doesn’t liability insurance cover?

What liability insurance does and doesn’t cover largely depends on the particular policy and insurer. However, any insurer will only cover accidental damage and injury. If a business owner intentionally makes a mistake or harms a customer or employee on purpose, they won’t be covered.

What are the different types of business liability cover?

Public liability cover

This type of liability insurance is specifically designed to protect business owners if their customers are injured or a customer’s property is damaged during the usual course of business. If a business owner is found legally liable, they could pay millions of rands in damages on top of hefty legal costs, so this one is important for anyone with a physical place of business.

Employer’s liability cover

Employer’s liability protects business owners if one of their employees is injured or their property is damaged during the normal course of business. If you’re the only person in your business, you won’t need this cover, but if you have even one employee, whether they’re permanent, temporary, or contractual, consider taking out the employer’s liability insurance.

Product liability and defective workmanship cover

If you sell any physical products, product liability and defective workmanship cover will protect you financially if you’re found legally responsible for any damage, illness, or injury caused by your product.

Specialised liability cover

This cover is for professionals who need particular types of liability insurance depending on their industry, such as accountants, doctors, engineers, and lawyers.

At 1st for Women, we also offer Errors and Omissions and Directors and Officers Insurance with our Specialised Liability Cover. 

The Professional Indemnity is specifically designed to protect businesswomen if they offer incorrect advice to a client or their negligence results in a financial loss for that client.
Directors and Officers Insurance protects those placed high up within a business against financial liability. 

How much liability cover do you need?

You’ll want to look for a cover specifically designed for you because there is no fixed amount that will work for all businesses. While the value of the fixed property can easily be estimated should it need repairing or replacing, the cost of damages and medical bills can vary widely. For this reason, business insurance providers will look at a number of factors when calculating how much liability cover you need. These include: 

• The specifics of your business. This includes the size of your business, where it’s located, how many staff members you employ, the experience of your employees, the type of ownership you have over the business (for example, is it a sole proprietorship or a private company?), and turnover.

• How much risk the business is exposed to. While it’s the insurer’s job to adequately insure the business, the owner knows their business best. So if you’re getting liability cover quotes, you’ll need to guide the insurer on what risks your business might face. Try to be comprehensive so you’re covered for as many eventualities as possible.

• The types of injuries a third-party might suffer on your premises or because of your property or products. In a lawsuit, damages will be awarded based on the type of injury, its extent, the loss of income resulting from it, medical expenses, and emotional suffering. Even though no one can predict these, insurers can calculate risk based on stats from previous claims and make sure you’re insured for enough to cover you if a third-party’s injury is severe.

• Industry requirements. Some professional bodies require their members to have a specific level of cover.

How are damages calculated?

Unfortunately, there isn’t just one formula for calculating damages. Each case is examined individually and the damages awarded are based on the facts of that specific incident. Some portions of damages, like existing medical bills, are easy to work out. Others, like future medical bills, are trickier. Often, an actuary will be appointed by the court to calculate damages based on a number of factors, including:

• Existing and future medical expenses.

• Emotional damage and physical suffering. This is often determined by the physical pain experienced following an injury or illness, the time it takes to fully recover, and how much a person’s life has been disrupted due to the incident.

• Costs to repair or replace property.

• Current and future lost income.

• Sick leave used to recover.

• What is fair to both the person claiming and the business being sued.

How can you reduce the risk of liability claims?

Everyone makes mistakes no matter how careful they are. No one wants a business liability claim made against them after all. But you can try to avoid these claims by doing your best to not behave negligently.

Make sure your workplace is as safe as possible for employees and customers. The easiest way to do this is to follow all applicable health and safety laws. This also means sanitising your workplace. Following the COVID-19 pandemic, having a clean and safe place of business is more important than ever.

Warn staff and customers of any dangers present, like wet floors, construction taking place, or a hard-to-see step.

Quality control of products is important to make sure all goods going into customers’ hands are in the condition they’re supposed to be in. 

Review your liability insurance every year to make sure you still have the right amount of cover, especially if anything has changed in your business like you moved premises or you hired a new staff member.

Liability Cover quotes

At 1st for Women, we offer Liability Cover to suit nearly any type of business, from general to specialised. Make sure your financial interests are protected should you face legal action due to negligence or a mistake on your part. Get a Liability Cover quotes specifically designed for today’s businesswoman by calling us on 0861 53 78 72.

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