I recently came across a perfect example of why insuring a business for public liability is so necessary. And it all started with a tiny oversight.
This case study follows a company that sold and supplied control systems for large agricultural businesses. The job in question was one that involved installing a sensor array into a group of silos used for storing grain. The sensors would be connected to a control system that regulated things like temperature and humidity within each silo, with the aim of prolonging the useful life of the stored grain, and keeping it in a controlled state. However, a subcontractor forgot to wire up one of the silos correctly, and his mistake wasn't uncovered for nigh on two years. Unfortunately, the stock was pretty much waste product by then.
Grain silos are large objects. Very large. A single silo can store anything up to several thousand tons of grain for the very biggest, and certain several hundred tons for smaller ones. That amount of grain represents a lot of money, or in this case, a sizeable loss. The grain store decided to sue the firm that did the installation, holding them culpable for this loss.
The amount in question ran into millions of dollars and the company could have very easily been bankrupted by this amount, closing the business and leaving it's employees jobless with no income, all because of a simple mistake by one man. Fortunately, the business owners had the foresight to cover themselves against such events by taking out a public liability insurance policy.
The firm's insurers then took over the legal correspondence, identifying that their client was at fault, and sorting out compensation for the grain owners. A settlement figure was decided upon, and the insurers paid out. The firm that had installed the system then continued to trade without the spectre of a huge bill for compensation haunting them.
It's worth noting here that even if the business had not been liable, the high cost of legal fees defending themselves could still have had potentially serious financial consequences, so public liability cover is worthwhile even if you are not at fault.
This case study follows a company that sold and supplied control systems for large agricultural businesses. The job in question was one that involved installing a sensor array into a group of silos used for storing grain. The sensors would be connected to a control system that regulated things like temperature and humidity within each silo, with the aim of prolonging the useful life of the stored grain, and keeping it in a controlled state. However, a subcontractor forgot to wire up one of the silos correctly, and his mistake wasn't uncovered for nigh on two years. Unfortunately, the stock was pretty much waste product by then.
Grain silos are large objects. Very large. A single silo can store anything up to several thousand tons of grain for the very biggest, and certain several hundred tons for smaller ones. That amount of grain represents a lot of money, or in this case, a sizeable loss. The grain store decided to sue the firm that did the installation, holding them culpable for this loss.
The amount in question ran into millions of dollars and the company could have very easily been bankrupted by this amount, closing the business and leaving it's employees jobless with no income, all because of a simple mistake by one man. Fortunately, the business owners had the foresight to cover themselves against such events by taking out a public liability insurance policy.
The firm's insurers then took over the legal correspondence, identifying that their client was at fault, and sorting out compensation for the grain owners. A settlement figure was decided upon, and the insurers paid out. The firm that had installed the system then continued to trade without the spectre of a huge bill for compensation haunting them.
It's worth noting here that even if the business had not been liable, the high cost of legal fees defending themselves could still have had potentially serious financial consequences, so public liability cover is worthwhile even if you are not at fault.
About the Author:
Matt Withers is Commercial Manager for Coversure Insurance Services. For a business insurance quote or more information about business insurance, please visit our site.