Public Liability Insurance

Definition, Explanation

The public liability insurance, or comprehensive general liability insurance, covers the liability hazards of traders, industrial entrepreneurs, handcrafts and liberal professionals. Damages can be caused by staff, company capital, company land and buildings. For damages that the company is liable for there will then be an insurance covering them. Certain occupations as doctors, architects, tax advisers, notaries, lawyers, insurance brokers are even obliged to contract an insurance of this kind. Ill consulting or ill calculations can rapidly cause miscues that lead to serious damages. Damage compensation, then, can easily exceed the company's capacities and even lead into bankruptcy. Therefore, it is advised to secure those hazards by contracting a public liability insurance.

Insured:

the policy holders, being the entrepreneurs
company directors, managers, employees
companies as juristic persons

Covered damages:

injury to persons
damages to property
financial damages that are connected to damages to persons or property
that are included in the insurance policy and
that arise during exertion of occupational activities (damages in leisure time are covered by private liability insurance)

Not insured are:

Working accidents, since the related claims are those of an employee against the employer. Claims against co-insured, in Germany, are not covered by public liability insurance. In such cases, the accident insurance applies
Claims that can be derived from contracted duties
Damages that are caused during leisure time
Borrowed, rented, or leased devices/facilities (here, a stationary or mobile contents insurance would apply)
Financial damages that do not arise as consequences of damages to persons or property
Deliberately caused damages
Violations of copyright, trademark or patent rights
Penal charges and fees
Claims above the contracted amount of coverage
Damages that had been impending without being averted despite apparent danger
Contracted liabilities beyond those from legal regulations

Jobs of the insurance carrier:

Validating damage claims of third parties
Conducting the lawsuit in case of legal dispute
Pays the costs of the lawsuit
Paying the damages, by compensation payment directly to the damaged person

The amounts of coverage normally are 2 million Euros for damage to persons and 1 million Euros for damage to property, per insured event. The maximum amount for the sum of all insured events within one year of insurance is double those amounts.

The price for the premium is calculated involving the company's economy-branch, number of employees and annual turnover.

Tips, Checklist

Determine exactly for which damages you require a public liability insurance. Make yourself a list of your relevant hazards
Be sure to include newly developing hazards into your existing public liability insurance. Before inclusion, those will be covered by a so-called provisional insurance for new hazards, until the next premium due date
Be counselled by insurances, credit institutions and specialized insurance brokers who know their business and the hazards well. You might require an additional product liability insurance in case of replacement or callback actions
If your company is dealing with hazardous goods, you will potentially have to contract an environmental liability insurance, additionally
Report on your company candidly. Only then, the best-matching insurance model can be determined. In case of unclarities, ask twice
Compare different insurance offers regarding covered hazards, conditions and prices. Some insurance companies offer special conditions for business starters
When making contracts and terms and conditions, be sure not to sign anything that compels you to extended liability
Subcontractors are not included / co-insured in a public liability insurance. They must contract their own
Check whether you want to extend your public liability insurance by abroad coverage
Think whether cost-sharing would pay off in your case
You can set the public liability insurance off against tax, as it is counted as operating expenditure

Last update: 04/13/2010

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