Public liability for a business is not always, as most people assume, a legal requirement if you have a business. However, I would still argue that it is a necessity, and as the prose below outlines, definitely something that all businesses should consider the absolute minimum cover they should have.

The case involves a firm that supplies and installs industrial monitoring systems, mainly to businesses in the agricultural industry. In this case, a grain storage facility. This involved a network of sensors spread throughout a number of large silos that the grain was stored in. The idea being that the condition of the grain could be constantly monitored and thus environmental factors such as humidity or temperature, could be controlled, and thus the state of the grain itself. The problem that arose was that a subcontractor working for the firm didn't connect up some sensors properly on one of the silos. It was two years later when the mistake was discovered, and by that time it was far too late to save the grain.

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 grain owners were seeking compensation for a few million dollars to compensate them for the loss of their grain, and the loss of the profits too. This could have had a devastating effect on the sensor system company and would have probably shut them down and put the workforce out on the street. The reason it didn't was that the company directors were wise enough to buy a public liability policy to protect themselves against just such instances like this.

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.

The final point here is an important one. Public liability insurance will pay legal fees for defending and sorting out a claim, whether the company involved was actually negligent or not. Considering the affect a large legal bill could have on a company's financial health, even if they were not at fault, this type of insurance seems worth the money.