What happens when a liability claim is filed against your home business?

Today’s guest post explains the background and process of a liability claim:

With the dot com boom of the oughties, and websites such as eBay and Amazon Marketplace, the number of people who decided to develop their own home business grew as distribution and payment methods became less convoluted. But as these endeavours grew from weekend hobbies into full-blown home businesses with a handful of employees, few will have looked into taking out professional liability insurance from a specialist.



For those that don’t know, professional liability insurance pays out against claims and damages made against your business, protecting your belongings in case you injure or damage people or property when on business related duty. If you could have done anything in your power to avoid any damage, chances are legal action may follow and this is where you’ll make a claim on your professional liability insurance.

As an example of the type of claims professional liability insurance protects against, the following outlines basic procedure and cover:


During a new employee’s first week, the individual hasn’t been brought up to scratch with proper health and safety protocol nor has the home workspace been kept as tidy as it should. While packing orders to post to customers, he slips on some loose box-wrap and injures his knee. It always serves businesses, no matter how big or small, to prepare for these kinds of eventualities through health and safety talks and/or forms that the employee fills out when they begin working for you. 


Either way, the employee might still decide to file a claim against you, so you will immediately want to ring your insurance company and report the event after dealing with any immediate medical emergencies. If the individual does decide to pursue legal recourse then normally your business will receive a notice of complaint and request for compensation, which you should immediately hand over to your insurance company.



There isn’t a precise way to determine when you are legally responsible for an injury with a slip, trip or fall case and in conjunction with correspondence to the insurer, independent legal advice should also be sought. Each case depends on whether you, as the business owner, were proactive enough that it wasn’t likely to happen and whether the employee was careless in not seeing or avoiding the item which caused the fall.

In most cases, the individual would have to prove that the cause of the accident presented an unreasonable risk and couldn’t have been anticipated under the circumstances. In order for him to establish this for his claim he would have to show that you had created the condition and that you knew about it and neglected to resolve it.

In this case, there must be a negligent party who caused the injury. As the employee was partially at fault for his own injury, he might still have grounds for a claim but his winnings would be significantly smaller than if it had solely been the home business owner’s fault. 



Professional liability insurance is relatively inexpensive compared to potential pay-outs resulting from any claims and there are plenty of policies to protect you and your home business out there. Don’t take the risk!