Business Liability Insurance: Meaning, Benefits, and Types

Small business owners, in such cases, often put their finances at risk when facing business-related lawsuits. This is where Business Liability Insurance becomes essential. It acts as a protective shield, safeguarding your company against unexpected challenges. This ensures that you can continue to grow and succeed in a competitive market without worrying about potential liabilities.

What is Business Liability Insurance?

Business liability insurance helps you protect your company’s assets and finances by financially covering your business’s legal obligations due to unforeseen circumstances. For instance, if a customer is injured on your premises or an employee sustains on the job, your policy can cover the medical costs arising from the same. Businesses with higher risk profiles can enhance their coverage by adding additional protection. However, this may lead to an increase in the premium.

Why is Business Liability Insurance Required?

Here are the things that may affect your business -

• Litigious Environment: Businesses face ongoing threats of legal actions and claims
• Common Incidents: Examples include slip and fall accidents or property damage from faulty products
• Financial Risks: Legal liabilities can quickly escalate into costly lawsuits
• Potential Consequences: Without protection, businesses may experience significant financial strain and reputational damage

The Solution?

• Risk Reduction: Liability insurance helps mitigate legal risks
• Financial Security: Provides coverage against claims for bodily injury, property damage, and legal expenses
• Asset Protection: Safeguards business assets and reputation during legal challenges

🗒️In Numbers: In 2023, a total of 2,943 complaints were submitted to the Ministry of Economy against companies. A survey, meanwhile, revealed that almost 60% of consumers in the UAE stopped buying a product or brand, either temporarily or permanently, due to a scandal or lawsuit.

Don’t let these risks catch you off-guard. Purchase Liability Insurance today!!

Types of Liability Insurance for Business in UAE

Each type of liability insurance for business provides coverage against different risks.

Here are some of the common types of Business Liability Insurance plans in the UAE that every business should have -

General Liability Insurance 

This covers claims of bodily injury, property damage, and personal injury that occur on a business’s premises or as a result of its operations. It is usually among the most suitable small business liability insurance types.

Who Needs It: Any business, regardless of size or industry, to financially protect themselves against common risks such as bodily injury and property damage

Example: If a customer slips and falls in your store, resulting in an injury, general liability insurance can cover the relevant medical expenses and legal fees

Public Liability Insurance 

It specifically covers the claims made by the public for injuries or damages that occur in connection with business activities.

Who Needs It: Any business that interacts with the public, including retail stores, restaurants, service providers, and event organisers

Example: If a delivery truck accidentally damages a customer’s vehicle while making a delivery, public liability insurance can cover the damages claimed by the vehicle owner

Product Liability Insurance 

This type of insurance provides coverage for claims related to injuries or damages caused by products sold or manufactured by the business.

Who Needs It: Businesses that manufacture, sell, or distribute products, to cover claims related to product defects or injuries caused by their products

Example: If a consumer suffers an injury due to a defect in a toy you manufacture, product liability insurance can cover the legal fees and any settlements

Directors & Officers Liability Insurance 

This liability insurance for small businesses protects company directors and officers against claims resulting from their decisions and actions while managing the company. This includes allegations of mismanagement, breach of fiduciary duty, or wrongful acts.

Who Needs It: Corporations, non-profits, and organisations with a board of directors or officers

Example: If shareholders sue directors for mismanagement of company funds, this insurance can help cover legal costs and settlements

Professional Indemnity Insurance 

It covers professionals against claims of negligence, errors, or omissions in the services they provide to clients

Who Needs It: Professionals such as lawyers, doctors, accountants, and other service providers who offer specialised expertise and advice

Example: If a consultant gives advice that leads to a client’s financial loss and the latter sues the company for it, professional indemnity insurance can cover the legal claims arising from the same

Business Liability Insurance Cost

Business Liability insurance premiums are primarily influenced by the risk levels associated with each business. For instance, a building contractor that operates heavy equipment like cranes and forklifts will typically pay more than an accountant who works in a safer office environment.

Businesses categorised as lower risk may benefit from a Business Owner Policy (BOP), which combines general liability and property insurance at a more affordable rate.

Additionally, when getting new or additional liability insurance policies, it’s important to note the exclusion clauses to prevent overlapping coverage from different insurance providers. This can also reduce your overall costs.

Exclusions of Liability Insurance

While liability insurance provides valuable financial protection, there are specific situations that it does not cover. 

You will not be covered against -

1. Any intentional wrongdoing or illegal activities
2. Claims arising from employment practices, such as wrongful termination or discrimination
3. Damage to your own business property is not covered, although it may be added for an additional premium in some cases
4. Any amounts exceeding the coverage limits specified in your policy
5. Events that occur outside the policy period or retroactive coverage period are not included

It's important to understand these exclusions as they may require separate insurance policies for coverage.

How to Apply for Liability Insurance via Policybazaar.ae?

Follow these steps to easily apply for the right liability insurance for small businesses online -

• On Policybazaar.ae, select ‘Business Insurance’ under the ‘Insurance’ drop-down
• Select the suitable type of insurance
• Fill out the lead form and submit it
• Wait for one of our experts to get in touch with you and discuss further steps

Frequently Asked Questions