Breaking Myths About Liability Insurance
By Daniel Lange, General Insurance Manager, Goldfus Insurance
After buying a house or setting up a business, the first thing most people think about is how to protect the investment and the physical assets.
A property Insurance policy can provide cover for structure or contents in a home or office environment for a fixed amount in the event of fire, theft or natural catastrophes such as an earthquake or other insurable occurrences.
But what if an unexpected accident or event occurs causing injury or loss to another person or entity whilst on your property?
Two questions often asked about Liability insurance:
- Why is it needed?
- Who needs it?
This can be best explained by some common and real case scenarios.
1. If someone is injured in my home or workplace, as long as I have not caused injury intentionally or through negligence, then I don’t have anything to worry about, RIGHT?
WRONG: The lack of either intent or negligence does NOT mean that you are not liable (by law) for injury caused to another. The wellbeing of a person entering your home or workplace is your responsibility, regardless of steps taken to ensure their safety.
2. If I warned a person of possible risk or danger – with a clear sign: “Enter at your own risk”, I cannot be held liable for injury caused to another, RIGHT?
WRONG: The fact that you are warning a person about dangerous circumstances does not divest you of the responsibility towards that person. A judge may decide that there is contributory negligence i.e. the “victim” has contributed in part to his own injury, which may reduce the amount of damages. But you may still be held liable.Likewise, you decide to do a bungee jump, and you are compelled to sign a form waiving all rights to claim against the operator if you are injured. This may heighten your awareness of the danger, and you may think twice before taking the plunge. But if you are injured you can still claim against the operator and he will be liable.
Warning signs and signed waivers may reduce the level of liability and ultimately the amount of damages awarded to an injured party. But they DO NOT REMOVE the essence of the liability owed.
3. I am selling a highchair for infants, manufactured by another company. If a child is injured due to that product, the manufacturer would be liable not me, RIGHT?
WRONG: If you are selling the product to another person then you are liable to that party. If you have Products Liability insurance then your company may seek recovery (of damages paid) from the said manufacturer. But the buck stops with you.
Moreover, if you an importer of a Product and market it in Israel, the law considers you as the manufacturer, from every aspect of liability and responsibility towards the consumer.
4. I am a busy Mom and a qualified massage therapist. I have some private patients that I treat at home. If something happens to them, I’d be covered under my Third Party Liability cover on my Household policy, RIGHT?
WRONG: Firstly, your standard Household policy will not provide coverage for damage/injury caused to others due to business activity done at home. There are some instances where the policy could be extended to cover “non-domestic” activity. But this may be limited in scope. Secondly, even if the Household Third Party Liability cover was extended to cover therapy activity, it would not cover loss/injury due to treatment. This is a Professional Liability and requires a separate Professional Indemnity policy.
Third Party Liability cover is designed for unforeseen events, accidents (trips and falls), but not mistakes or omissions whilst giving Professional services.
These are just a few everyday scenarios where many people erroneously overlook the need for Liability insurance. We live in an increasingly litigious society, and Israel has one of the highest lawyer to population ratios in the world. Barely a moment goes by where we are not exposed to a potential liability from damage we may cause to another, whether in our home, car, workplace, or even using social media. Potential damage might be be bodily injury, property damage, financial loss from advice given, or even personal injury in the form of invasion of privacy or slander. None of these need to be intentional, malicious or even negligent, for a liability to exist.
Failure to adequately deal with liability exposures, can place an organization or individual in severe financial peril. But by assessing the potential risks facing a person’s profession or activity, and properly insuring those exposures, a potentially financially damaging situation may be averted.
For more information about Liability Insurance contact us today!