Third Party Liability Insurance is something that every business owner should seriously consider. In logistics, this type of coverage gains importance due to the nature of the activities developed and the contact with clients, suppliers and other third parties that is required along the supply chain.
Why is it called Third Party Liability Insurance?
According to simplybusiness.com.uk, Third Party refers to someone who is not directly involved within the contract, but could be affected by it. Usually a person who can make a claim against you: A person walking down the street, a client, a supplier… anybody that could be injured by your business.
“If you face a compensation claim from a third party, your liability insurance could pay out to cover your legal expenses as well as the compensation payment, up to the limit of your policy.” says the article.
Example:
If an accident occurs during the transportation of the container and causes damages or death to a person or other people’s properties, you could be facing a compensation claim.
If that happens to you, your Third Part Liability insurance could pay out to cover all of the legal expenses as well as the compensation payment (limited by the coverage of your policy) such as: medical cost, repair expenses, etc. The level of your third part liability insurance should be based on the level of risk that your business faces.
So, no matter how careful you are with your business, there is always a chance that a third part could blame you for any damage caused to them or their property. As the compensation payment could be huge, the recommendation is to have more than the minimum coverage.
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Sources:
http://www.simplybusiness.co.uk/knowledge/articles/2016/01/what-is-third-party-liability-insurance/
