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If you are self-employed, either as a sole trader, partnership or even a LTD company, one thing many businesses need to have is liability insurance.

Liability insurance is insurance that protects a business, company, or sole trader for any damages, injuries or other things that might occur due to their work or workplace that could make them liable.

An example may be a sole trader who is a painter is hired by a family to paint their home inside and out.  During the process of doing this work, the painter breaks or damages some of the furniture inside the property.  Needless to say the family is upset about this, however depending on the nature of a liability insurance policy, they may be able to make a claim through the policy for damages and be compensated for their loss.

The same example can be used for a larger business or LTD company.  If someone experiences a loss through neglect or an error that is the business’s fault, they may be able to claim compensation through the liability insurance policy.

Another example may be of a shop doing trade in a business/retail centre or town centre and a customer is accidentally injured for whatever reason, and it is the shop’s fault.  The injured shopper may be able to make a claim through the shop’s liability or other insurance policy.

Some liability policies have an E and O part to them, or a business may have a specific E&O insurance policy; these are errors and omission policies.

E&O policies are usually for service related businesses, and cover a sales person or business if they fail to offer a service they should (omit) or if they make an error (error) in the service they sold or provided.

An example could be a company sells a service such as new doors and windows and they fail to tell you that when you clean them you must use a specific cleaning agent or the windows will be ruined.   You clean the windows with a generic window cleaner, the windows fog up and are ruined.  You may have a claim under an E&O insurance/liability policy.

Do these types of policies create a more litigious society or does the eager for compensation claimant force the need for such insurance policies.

That is like asking which came first, the chicken or the egg.


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