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Public liability insurance: measures that could mitigate potential liability

February 2015

Every company should have some form of public liability insurance as the costs and consequences of defending legal proceedings can put serious financial pressure on the business.  Such liability could result from a member of the public suffering damages, either to his/her person or property, on the business premises.  

As much as public liability insurance is important, companies need to also ensure they have also implemented reasonable measures to mitigate potential liability.

So what are these measures and why are they important?

Risk analysis and incident records
Every company should have a clear understanding of the potential challenges that every aspect of the business may face.  A comprehensive analysis is a great starting point to identify potential risks as companies do need to ensure they are eliminating harmful situations to customers.  Even though preventative measures are implemented, it is also important for every business to have a proper record system in place to document incidents.  These could be in the form of an occurrence book, witness statements or video footage.

Disclaimer agreements
Disclaimers have been known to absolve companies from liability in certain instances however, it is crucial to note that the effectiveness of these agreements has diminished over the years.  This is due to the fact that the majority of disclaimer agreements have the effect of restricting a consumer's right to seek judicial recourse or are inconsistent with the provisions of the Consumer Protection Act.  With that said, it is still possible for a carefully worded disclaimer to serve as a buffer against public liability.

Supplier or service provider contracts
A supplier or service provider contract should clearly set out the duties and responsibilities of each party.  It should also clarify the legal consequences in the event of liability arising from the outsourced function.  Continuing the engagement with suppliers or service providers once the contract has ended is a critical mistake that many businesses make.  Due to the diminishing reliance on disclaimers, valid contracts play a more significant role and can safeguard the company from public liability based on the product or service provided by a third party.

Recent example
An example of a potentially catastrophic public liability incident is the recent dislodging of the Hyundai hot-air balloon from its basket during routine safety checks.   It has been reported that only the operator sustained minor injuries.  Had this occurred while the balloon was carrying its 30 person capacity or if members of the public were injured, the consequences could have been dire and would likely have given rise to a significant amount of public liability claims.

In order for these claims to have succeeded, it would have been necessary for the injured parties to prove a degree of negligence on the part of the operator.  Depending on the cause of the incident and the wording of any disclaimers in place, it is unlikely that the operator would be able to escape liability for any negligent conduct on its part by relying on indemnities or disclaimers.

The ultimate test is always whether or not there was negligence on the part of the alleged wrongdoer and as such it is important for business to ensure that their actions and/or omissions do not negligently result in any harm to their patrons. 

The team

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