Your business insurance policy has to cover a lot of eventualities. For example, you may need to insure your premises, your stock and equipment and you and your employees.

You also need to make sure that you are covered in case anything happens to anyone outside of your business in the course of your work. Typically, this is covered by public liability insurance; however, your insurance company may also offer product liability benefits as well.

What's the difference between the two types of insurance?

What Is Public Liability Insurance?

Public liability insurance typically protects your business if something happens to someone else while you are going about your work. This insurance protects you if you, or someone who works for you, are liable for certain types of accidents, injury or damage.

So, for example, if you're a builder and you're working on a house and drop a plank of wood off a scaffold which hits a passer-by, then you may get sued for the injuries the accident caused. Your public liability policy would cover these costs according to its specified limits.

What Is Product Liability Insurance?

Like public liability insurance, product liability cover protects third parties from things that might happen to them because of your business. The difference here is that this coverage deals with problems with specific products. It may extend after you've finished working on a job.

So, for example, say you're building a wall along a driveway. You don't use the right kind of mortar for the construction, and the wall crumbles and falls on to a car. The customer may qualify for a product liability claim to cover the damage to the vehicle on the basis that you supplied and used a faulty product.

Do You Need Public and Product Cover?

While you may think that you can get away with just having public liability insurance, you shouldn't ignore product liability coverage. You don't have to be the manufacturer of a product to run into problems here. If you sell, supply or use products that cause an accident or damage, then you may be liable as well.

Some insurers bundle product cover into their public liability benefits; others sell it separately. To find out if you should include this protection, ask your insurance company or broker for advice. They can tell you how you might be liable for product problems and what kind of cover you need for your business.