We all know Murphy’s Law: Everything that can go wrong eventually goes awry! This also applies to company activities, services or products. And the company or the entrepreneur is personally liable for all damages that arise as a result. No matter whether people, assets or property are damaged – without a corresponding insurance cover the company or its owner is liable. That can quickly go into the tens of thousands of euros, if for example personal injury arose.
Here is an example from the files of a large German insurance company: A child crashes through a damaged stair railing that had built a craft business in the home. The child is disabled for life. The amount of compensation to be paid by the company amounts to a total of 950,000 euros, which consists of compensation for pain, house remodeling costs, medical treatment costs, etc.
Companies are liable like private persons – without liability limits
Businesses or entrepreneurs are liable like private persons without liability limits. This is what the Civil Code (§ 823 BGB) provides. Thus, with a large amount of damage, the entire company can easily be at risk – up to bankruptcy with all consequential damages for the owner himself as well as his employees who lose their jobs.
A public liability insurance is thus part of professional risk management by the management. It therefore belongs to every insurance company in its insurance portfolio. After all, insurance coverage does not only include the company as a legal entity, but also owners and employees are protected against compensation for their business activities.
What does a public liability insurance (BHV) do?
A lot can happen when you are doing business. The damage totals can quickly go into the hundreds of thousands of euros, such as environmental or personal injury. This applies to start-up companies as well as established companies with several branches and a few hundred employees.
The BHV acts in the event of damage as a combined legal expenses and liability insurance. It first checks the claim for damages for its legality. If their experts come to the conclusion that these claims are justified, they will reimburse the claimant or the injured party up to the agreed insured sum. This may be personal, material or pecuniary damage suffered by third parties as a result of operational activities, services or products.
If the insurance company does not consider the claims for damages justified, it rejects the claims of the alleged victims. It takes over the costs for lawyers, appraisers or courts in case of litigation and thus offers the company the protection of a classic legal protection insurance.
Regular checks give security
Risk situations in companies change. In order to ensure that no false or underinsurance can develop over time, the following aspects should be considered:
- Old contracts should be regularly checked for accuracy of fit. An adjustment of the public liability insurance by updating the insured risks with the previous insurance company can save considerable sums without reducing the insurance cover.
- New contracts can not only provide tailor-made insurance protection but also significant cost optimization. A list of all insured risks also prevents conflicts with the insurance company in the event of a claim.
- Sums insured must always be determined in such a way that all costs can be covered in case of damage without having to resort to own resources. This is especially true for start-ups and companies with high risk of damage.
During the consultation, management and insurance consultants jointly analyze the risk profile of the company and then determine the optimal sum insured. A professional insurance broker makes sure that the company gets its optimal insurance cover at the lowest possible price.