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What does Public Liability Insurance Cover?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
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Public liability insurance cover is a type of insurance coverage that protects individuals and businesses when interacting with the general public or the employees of a client. This type of coverage is carried by a number of business professionals, with many companies providing the liability insurance to employees whose actions could possibly result in some sort of injury or damages to customers. There are several different coverage benefits provided by a public liability insurance plan, including taking care of legal fees in the event the insured party is a defendant in a civil suit resulting from one of the covered activities.

The overall function of public liability insurance is to protect businesses and the people who work for those companies from costly legal action that could result from some type of real or perceived damage that may occur due to the actions of the company or its representative. Typically, the coverage will pay the total costs of any damages awarded by the courts, rather than the defendant having to pay those damages out of pocket. In addition to settling the damages, public liability insurance will often pay all legal expenses associated with the action, a benefit that further prevents the occurrence of any out of pocket expenses for the insured party.

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One way to understand how public liability insurance coverage works is to consider a small business owner who operates a retail store. During the course of shopping, a customer is injured by slipping on a freshly waxed section of floor. Should the customer sustain some sort of injury that requires medical treatment, a claim on the coverage can be submitted and the out of pocket medical expenses of the customer are settled. In the event that the customer chooses to file a civil suit to collect damages as a result of the incident, the provider of the public liability insurance will work with the insured party and his or her legal counsel to settle the issue. Should the issue go to court, the provider ultimately covers both the legal expenses and any amount that is awarded to the plaintiff by the court.

The cost for public liability insurance is typically very high, given the degree of risk that the insurance provider assumes and the potentially high claims that can be filed on the coverage. While the coverage is expensive, the peace of mind provided by the insurance is well worth the cost. In the event that the insured party is sued, the fact that the insurer covers all the expenses related to any incident covered in the terms and conditions of the policy means no financial hardship and an improved opportunity to put the unfortunate event in the past.

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