A Guide to High-Risk Liability Insurance

By Olivia Johnson - Trusted UK Business Expert

Last Updated 8th of December 2024

4 minute read

Every business faces risks, but some industries are exposed to higher levels of danger. High-risk liability insurance offers protection for companies operating in sectors with greater chances of accidents, injuries, or lawsuits. This guide will help you understand why you might need it and how it works.

High-risk liability insurance is designed to protect businesses operating in industries with higher risks of accidents, injuries, or legal claims. It covers potential liabilities, such as bodily injury, property damage, and legal fees, helping businesses avoid financial loss.

There’s more to high-risk liability insurance than just basic protection. In this guide, we’ll explore how this type of insurance works, what it covers, and why it’s essential for certain industries.

What is High-Risk Liability Insurance?

High-risk liability insurance is a specific type of cover designed for businesses operating in industries where the likelihood of accidents, injuries, or legal claims is significantly higher. These industries include construction, manufacturing, healthcare, and other fields where there are higher safety risks or legal exposures.

The purpose of this insurance is to provide financial protection in case your business is held liable for causing harm to a person, damaging property, or being involved in a lawsuit. It helps cover the cost of compensation, legal fees, and settlements that could otherwise be devastating for a business.

Without high-risk liability insurance, businesses in these sectors may face severe financial losses, lawsuits, or even bankruptcy. The insurance gives peace of mind by ensuring that if something goes wrong, the financial burden isn’t solely on the business owner.

How Does High-Risk Liability Insurance Work?

When you purchase high-risk liability insurance, you pay a premium, which is usually higher than standard liability policies due to the elevated risk. In exchange, the insurance provider agrees to cover claims related to accidents, injuries, or damages that occur during your business operations. Here’s a breakdown of how it works:

• Accidents and Injuries: If someone is injured on your business premises or while working for you, your policy can cover medical costs and compensation for pain and suffering.
• Property Damage: If your business activities cause damage to someone’s property, high-risk liability insurance helps cover the cost of repairs or replacement.
• Legal Costs: If your business is sued, the policy covers legal fees, including lawyer costs and court expenses.
• Settlements and Judgments: If a court rules against your business or you reach a settlement, the insurance will help pay the compensation amount, up to the limit of your policy.

It’s important to note that high-risk liability insurance doesn’t cover everything. Policies typically have limits, meaning there’s a maximum amount the insurer will pay for a single claim or multiple claims. You’ll need to carefully assess the level of cover required for your business.

What Businesses Need High-Risk Liability Insurance?

Some businesses face greater risks due to the nature of their work, making high-risk liability insurance essential. These industries include:

• Construction: With heavy machinery, tools, and heights involved, accidents are more likely, and the risk of injury or property damage is high.
• Manufacturing: Working with dangerous equipment or hazardous materials increases the likelihood of accidents, injuries, or environmental damage.
• Healthcare: Medical professionals face the risk of malpractice claims if patients are harmed due to errors or negligence.
• Transportation and Logistics: Driving large vehicles or transporting goods carries the risk of accidents, especially on busy roads or with hazardous materials.
• Hospitality and Events: Venues hosting large groups of people are at greater risk of accidents, injuries, or property damage during events.

What Does High-Risk Liability Insurance Not Cover?

While high-risk liability insurance provides crucial protection, there are some things it doesn’t cover. Common exclusions include:

• Intentional acts: If damages or injuries are caused intentionally, the policy won’t provide coverage.
• Employee injuries: Worker injuries are usually covered by employer’s liability insurance or workers’ compensation, not high-risk liability insurance.
• Professional errors: If the claim is due to professional negligence, you may need separate professional indemnity insurance.
• Product liability: If you manufacture or sell products, you might need product liability insurance for claims related to defective products.

Knowing what’s excluded from your policy can help you understand where additional coverage might be necessary to fully protect your business.

Ensure your high-risk business is fully protected. Contact us today for a quote on high-risk liability insurance, and safeguard your business from potential financial losses.

FAQ

Why do some businesses need high-risk liability insurance?

Businesses in industries with a higher likelihood of accidents, injuries, or legal claims—such as construction, manufacturing, and healthcare—need high-risk liability insurance to protect against financial losses from claims.

How much does high-risk liability insurance cost?

The cost varies depending on your business’s size, industry, and the level of coverage required. High-risk industries generally have higher premiums because of the increased likelihood of claims.

Can I lower my high-risk liability insurance premiums?

You can sometimes reduce premiums by implementing safety measures, providing employee training, and maintaining a good safety record. Working with your insurer to assess risks and take preventive steps may help lower costs.

Does high-risk liability insurance cover lawsuits?

Yes, high-risk liability insurance covers legal fees, court costs, and settlements or judgments if your business is sued for accidents, injuries, or damages.

Is high-risk liability insurance mandatory?

It depends on your industry and location. In some sectors, such as construction, it may be required by law or by clients before starting a project.

What’s the difference between general liability and high-risk liability insurance?

General liability insurance covers common risks like accidents or property damage in low-risk industries. High-risk liability insurance offers more comprehensive protection for businesses facing higher levels of danger and potential claims.

What happens if I don’t have high-risk liability insurance?

Without high-risk liability insurance, you’ll be responsible for paying legal fees, settlements, and compensation out of pocket if a claim is made against your business. This could lead to financial difficulties or even bankruptcy.

Can I get high-risk liability insurance if I have a poor safety record?

Yes, but you may face higher premiums. However, improving safety protocols and addressing risks can help you secure coverage at more affordable rates over time.

What is the claims process like for high-risk liability insurance?

The claims process usually involves notifying your insurer as soon as an incident occurs, gathering relevant documents, and working with your insurance provider to assess the situation. The insurer will handle legal aspects and settle claims based on your policy’s coverage limits.

Is there a maximum limit to how much high-risk liability insurance will pay?

Yes, policies have limits that determine the maximum amount the insurer will pay for a single claim and overall during the policy period. You should choose coverage limits that match your business’s needs.

Having high-risk liability insurance gives businesses in dangerous industries the financial protection they need to continue operating smoothly, even when the unexpected happens. With the right cover, you can focus on growing your business without worrying about costly lawsuits or claims.