Why is liability insurance important?

Kylie Quinn, director of Hire Insurance Brokers, explains the liability risks for hire companies if an accident occurs on your premises or while a client is using your equipment.

Public and Products Liability Insurance, often referred to as Liability Insurance is designed to protect your business from claims made by individuals outside your business who are not employees, for compensation of injury or damage to their property as a result of your business activities.

For example:

• A customer slips and falls over in your hire yard; sues you for the injuries they have suffered.
• A customer is injured from using equipment hired from you and sues you for medical expenses claiming you hired unsafe equipment.

The financial implications of these types of incidents can be significant. What’s even more alarming is you don’t have to be directly at fault for the legal fees to add up.

As an example, a Hire Insurance Brokers client organising a charity bike ride was presented with a personal injury claim from an injured rider. The accusation was that they owned sheep that had escaped a paddock and caused a motorbike accident. The accident happened on a public road and there were no other parties involved.

This case incurred $5,000 in legal costs just to reply to the nuisance suit. Where a claim is brought before the court, we have seen a hire company faced with a $500,000 bill after a customer injured his ankle after the scaffolding trestle he hired collapsed. The fall was minimal and required no hospitalisation however the injured party also claimed psychological injuries as a result of the minor fall. The costs incurred in this claim were in excess of $400,000, with the legal costs being almost as great as the awarded damages.

Given the unpredictable nature of accidents, liability insurance can assist you with the costs of investigating, defending and settling demands, as well as compensation payments you are found legally liable to pay.

Related story: Understanding the link between hire agreements and insurance claim.

Hire Insurance Brokers is an HRIA business partner providing tailored insurance cover to our members. Find out more here.