Why Your Company Needs Civil Liability Insurance

No company is immune from civil liability claims. That’s why you should get insurance to protect yourself from such claims.

Under the Civil Code of Québec, customers, suppliers, or any other individuals or organizations are entitled to sue a company that has caused them damage:

• If the damage is the result of fault on the part of the company, and
• If a link can be established between the fault and the damage.

If the financial loss is significant, the  consequences of such a lawsuit can be profound.

There may be a direct financial loss if property is damaged, for example if a defective product causes a fire, or the loss can be caused by bodily harm. For example, a retailer may be held liable if they don’t remove the ice from in front of their store and someone slips and falls. If the victim suffers a permanent disability, the company’s loss will be significant.

Companies are not only liable for their own actions; they also assume liability for mistakes made by their subcontractors. Injured customers will turn to the company they paid and signed a contract with, even if the damage was caused by one of the company’s suppliers.

Even Small Businesses Need Insurance

Fires and accidents are serious risks that can undermine the financial health or even the viability of your company. General liability insurance protects you in two ways:

• By helping your defend yourself. In the event of a lawsuit, the insurance covers the cost of legal defence.
• If your company is found liable, the insurance pays the amount allocated to the victim.

The insurer will determine the general liability insurance coverage amount, taking into account your company’s activities and particular situation. The amount corresponds to the maximum compensation that can be paid to an injured third party. In addition to this amount, the insurance company will also reimburse legal fees and expenses.

Good general liability insurance not only protects your company—it can be a business asset. Many clients require their suppliers to have adequate liability insurance.

The content of this article does not constitute a legal opinion.