Public liability: Overview, definition, and example
What is public liability?
Public liability refers to the legal responsibility a business or individual has for injuries or damages caused to third parties (people who are not directly involved in the business) while they are on the business premises or while using its products or services. It is a type of insurance or legal coverage that protects businesses from financial loss arising from claims made by the public for accidents, injuries, or damage that occur due to the business's operations.
For example, a business may have public liability if a customer slips and falls on their property or if a product causes harm to a consumer. Public liability insurance helps cover the costs of legal fees, settlements, or medical bills that might arise from such claims.
Why is public liability important?
Public liability is important because it provides businesses with financial protection in the event that they are held responsible for harm or damage to third parties. Without adequate coverage or legal protections in place, businesses could face significant financial challenges, including costly lawsuits, legal fees, and compensation payments.
For businesses, having public liability coverage ensures that they are not financially burdened by unexpected incidents, allowing them to operate with peace of mind. It also fosters trust with customers and the general public, as it shows the business is committed to safety and responsible operation.
Understanding public liability through an example
Imagine a retail store that invites customers to shop in its physical location. If a customer trips over an object on the floor and is injured, the store could be held liable for the injury. The injured customer may file a claim against the store for medical expenses, lost wages, and pain and suffering. If the store has public liability insurance, the insurance can cover the costs associated with the legal claim, including medical bills and any settlement or judgment.
In another example, a manufacturer sells a product to consumers, and a consumer is harmed by a defect in the product. If the consumer files a lawsuit for product liability, the manufacturer’s public liability insurance could help cover the legal costs and any damages awarded to the consumer.
An example of a public liability clause
Here’s how a public liability clause might appear in a business contract or insurance policy:
“The Company shall maintain public liability insurance with coverage of no less than [X] amount to protect against third-party claims for bodily injury, property damage, or personal injury occurring on the Company’s premises or arising from the Company’s products or services. This coverage shall be effective throughout the term of this Agreement.”
Conclusion
Public liability is a key concept in both legal and business contexts, providing protection for businesses against the risk of being held financially responsible for harm or damage to third parties. Whether due to accidents on business premises or harm caused by products or services, public liability insurance helps businesses manage the financial impact of these events. For businesses, understanding public liability and ensuring adequate coverage is essential for protecting assets, minimizing risk, and maintaining trust with customers and the public.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.