A company is liable for damage, whether material, immaterial or physical, which it causes to others in the course of its business activity.
Any person directly or indirectly connected with a company - a customer, supplier, prospect, visitor or employee - can bring a claim against a company and hold it liable if he or she has suffered damage.
There are many situations and many causes: professional misconduct, negligence, omission, error of conception or assessment, lack of caution, lack of diligence, erroneous or insufficient advice and recommendations, delay in performance, abuse of intellectual property, violation of image rights, non-conformity, damage to the goods entrusted to the client...
Whether it is an accident suffered by a visitor while visiting the company's premises, a failure to perform a contract or a poor service, all these events can give rise to claims and result in costs, often substantial, for the company.
It is to respond to these situations and to allow the company to be accompanied in the event of a claim that contracts covering the company's liability were created.
. Operating liability, also known as general liability insurance, comes into play when the damage is caused by an event related to the day-to-day life of the company.
All damage that may be caused in the course of the company's activities: damage caused to customers, third parties or employees (in the case of inexcusable fault on the part of the employer) will be covered by this insurance.
The contract will cover different types of damage:
Personal injury: this is damage to the physical integrity of the person. The compensation will cover medical and hospital expenses, compensation for loss of earnings, etc.
Property damage: this is damage to people's property such as damage to or destruction of property. The compensation will cover, for example, the replacement of broken or damaged equipment or objects.
Immaterial damages: these are the financial losses linked to the damage, such as the interruption of a service, the impossibility of enjoying a right, etc.
Operating liability insurance covers damage related to the life of the company and not to its own activity.
The damage covered by the business liability insurance is only that caused to any natural or legal person (except employees and the company director), within the framework of its activity and likely to engage the company's liability.
This insurance covers only part of the risks incurred, since the damage must be related to the life of the company and not to its own activity. The damages covered do not include those related to the profession carried out, the services provided or the products sold by your company.
This is why, in addition to the Operating Liability, most contracts also cover Professional Liability (PL)
. The professional civil liability (RC Pro) comes into play when the damage results from the company's services. Any damage, error or negligence committed in the performance of your activity may cause damage to third parties. The professional civil liability will be all the more useful for services provided by the company and will cover errors or negligence committed during their execution.
This contract will cover different types of damage:
Bodily injury, in case of injury or death. For example: During his inspection of a building, a guard accidentally injures a visitor. The visitor claims for the health costs incurred.
Materialdamage, in the event of damage or destruction of property. For example: In the context of your service, a mishandling damages your client's machine. He claims the cost of replacing the equipment.
Consecutive Immaterial Damage. This is financial loss directly linked to material damage or bodily injury. For example: One of your company's project managers is immobilised for several weeks following an accident. If the delay is detrimental to your customers, you will have to compensate them.
Non-consequential damage. When financial losses are incurred as a result of damage other than physical injury or material damage. For example: The installation of new software causes a loss of data. An external service provider must be called in to reconstitute the lost data from paper archives. The victim company claims compensation for the costs incurred. These may be covered by the professional liability insurance.
Professional liability insurance allows you to carry out your activity with peace of mind by protecting you in the delivery of your service, by paying your defence costs and by correcting your mistakes.
You are covered in particular in the following cases: breach of contract, errors or omissions, unfair competition, defamation, invasion of privacy, supply of defective products, infringement of intellectual property rights, loss or destruction of customer data, etc.
. Professional liability insurance is mandatory for the following professions:
- building craftsmen,
- professionals in the food sector,
- liberal professionals (lawyers, notaries, jurists, doctors, accountants, architects, etc.),
- consulting professionals (consultants, estate agents, insurers),
- tourism professionals
- if your company has premises or vehicles for transporting people or goods.
For all other activities, there is no legal obligation.
However, in practice this contract is indispensable and can be considered a practical obligation.
A certificate of insurance is systematically required in calls for tender, whether public or private. Increasingly, it is also required in relations between professionals.
How is an insurance premium calculated?
There are almost as many rates for professional liability/operations liability insurance as there are companies in France because the criteria used to calculate the premium vary from one insurer to another.
The main elements are as follows:
. Turnover: the higher the turnover, the greater the financial risk for the insurer. The amount of the premium is often affected by this
. The size and status of the company: a self-employed person working from home is less risky than a SME with 50 employees and industrial premises and equipment; again, this affects the premium
. The sector of activity: construction companies, for example, or certain so-called sensitive activities - health, chemicals, etc. - where the risks are high (financial stakes, delays, bodily injury, poor workmanship, etc.) bear high premiums. - where the risks are high (financial stakes, delays, physical accidents, poor workmanship), incur high premiums;
. The type of cover: depending on the budget and, above all, on the risks linked to its activity, the company will have to choose between a contract that simply covers its operations and a more complete formula with other guarantees such as "after delivery" or legal protection;
. The specific features of the contract: as in any insurance contract, the deductibles (sum to be paid by the company for each claim), the ceilings (sum above which the insurance no longer covers) and the exclusions (situations for which the insurance cannot be triggered) vary the amount of the premium.
In conclusion:
Professional indemnity insurance and operational indemnity insurance are effective ways of protecting a company's business, as compensation can be extremely costly for the company.
Being well insured is also a guarantee of reliability for clients, partners and suppliers.
It is essential to think about a global insurance, which covers both professional civil liability (RC Pro) and operational civil liability (RCE) because these two contracts complement each other and allow companies to be protected at 360°.
At MPH Insurance we are here to help you find the most suitable contract.
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