The purchaser (the “insured”) is protected from the risks of liabilities deriving from lawsuits and claims alike by liability insurance. This is a part of the general insurance system of risk financing. It is meant to protect the beneficiary against insurance claims from a third party.

This document fulfills two major duties: to defend and to indemnify. The duty to defend is activated when the beneficiary of the policy is sued. In turn, the insured presents the claim to its insurer. The duty to indemnify refers to the obligation of the underwriter to pay all the amounts for which the beneficiary is held liable, within certain limits set by a policy.

In many countries, this kind of policy is compulsory for companies or individuals at risk of being called by third parties for negligence. Such insurances fall into three main classes: public, product and employers policies.

Public liability insurance is imposed whenever members of the public, customers, clients, trespassers, sub-contractors visit your premises. Business activities or processes have the potential to affect third parties or damage their properties. This type of policy is very useful because it will cover your expenses if someone is harmed accidentally by you or your business operation. Nevertheless, you have to keep in mind that it deals only with claims related to third parties, your own employees excluded. In case an employee suffers injury while performing his or her tasks at work, an employers insurance is requested to pay the compensation.

The second class is represented by product liability insurance, which is not compulsory. Yet, certain legislation demand from those manufacturing or supplying goods to be protected by some form of product insurance. There is also the possibility to benefit from a general policy which covers the risks of both public and product responsibility, deriving from direct or indirect actions of the insured.

The greatest public risk exposure regards shopping centers, markets, sporting venues, theaters, hotels and resorts, clubs, pubs. For such places frequented by large numbers of third parties, the policy in discussion is of prime importance. It makes available the money required in case the activities carried out in the places mentioned above cause damage or loss to people visiting them. 
So, do consider it seriously!