Whatever your trade and whatever your size, if you sit back and think about the risks that you face, third party liability is one that will be in your top three. If not, you need to really consider the potential that your business faces for a costly lawsuit.
At least 25% of every liability insurance claim is made up of legal fees, whether the claim is legitimate or not. What this means is that in 2009 and increasingly in 2010 it is easier than ever before to raise a claim against a business. Shoppers, customers and clients will think nothing about making a claim against you, partly in the hope that a small payment is made to settle early.
If a claim goes beyond this, you will need to appoint a solicitor even if you are fending off the most spurious of claims. A good quality solicitor will cost at least £100 an hour and that is without the costs for post, photcopying, printing and telephone calls which are usually charged individually.
One risk you will face, if you manufacture or supply anything, is for products liability insurance. If that tin of beans, bottle of pop or toy car causes injury, illness, disease or sickness, there is a significant chance you will face a claim.
One common mistake is that if you sell a product made by someone else you can just pass the claim to them. In UK law this is not the case. If you sell me a can of cola, I have a financial relationship with you and consequently I can sue you. Someone down the line your insurers will recoup the cost from the manufacture but they will pay out first.