Liability Insurance For Self-employed In Spain
With civil liability insurance, self-employed in Spain can acquire more significant protection guarantees throughout their professional life. Are you considering taking out one? Here we explain exactly what they are and how they can benefit you.
What does liability insurance consist of?
Liability insurance protects you against risks that may compromise the safety of third parties. If, for example, the exercise of your professional activity generates a traffic accident, you as a company will have to respond to it. Civil liability insurance provides compensation on your behalf for the people affected to prevent this type of incident from jeopardising your financial stability.
They are oriented to all those extra-contractual incidents that occur within the work activity. When we speak of non-contractual incidents, we refer to those caused by fortuitous circumstances external to the responsibilities and obligations covered by a contract.
Damage and types of consequences
When a third party suffers damage, they are entitled to compensation, provided that the origin of the incident is to be found in an action, omission or negligence of the self-employed, company or business manager. That is set out in Article 192 of the Spanish Civil Code.
There are two levels of consequences for this type of incident. Either at the criminal level or the civil level.
We speak of criminal consequences when the negligence or action that generates the damage is framed as an offence under the criminal code.
However, civil consequences result from an action, omission or negligence that is not a criminal offence within the legal system.
In the latter case, the responsible person (the business owner or the self-employed professional) will have to pay compensation to repair the damage caused.
Civil damages and legal liability
For civil damages to be subject to compensation, specific conditions must be fulfilled.
On the one hand, the extent of the damage must be proven and measurable in economic terms. On the other hand, it must be proven that a third party has indeed suffered damage and that the self-employed person caused this damage in the course of his professional practice.
When these requirements are met, liability insurance can respond to such an incident and repair the damage caused. The type of cover and the amount of compensation will depend on the type of insurance taken out. It is therefore essential to have certain notions when choosing a suitable backup.
As mentioned before, civil liability insurance covers all those consequences that are not included in the penal code as criminal offences.
The concept of compensation can be subject to the coverage of material, personal and patrimonial damages or losses that the insured may cause directly or indirectly to third parties. Furthermore, they can also cover legal defence needs derived from a process opened through civil proceedings.
How to choose liability insurance for the self-employed?
There are many types of businesses and many types of self-employed. The variety of professional profiles is reflected in a wide variety of liability insurances.
That is why, to choose the one that best suits you, you should analyse your needs and the main risks arising from your activity. Here is some helpful information that you may find useful:
ICEA Liability Insurance Ranking
In February 2021, ICEA published a ranking of the best liability insurers based on their market shares. Within the insurance sector, Mapfre ranks first with a 14.03% market share.
However, it is crucial to remember that their ranking does not establish any categorisation by modality and therefore does not reflect how these premiums are distributed.
It is not the same to take out general liability insurance for businesses or the service sector as it is to take out insurance for sectors with a higher risk rate, such as construction.
What are the most common liability insurance claims?
The latest report produced by the DGS (Dirección General de Seguros) provides a fairly illustrative sketch of the claims occurring within civil liability.
The study finds that more than 56% of claims are related to a claim rejection by insurers. This figure is quite high but has been decreasing over the last few years.
In the second place, claims due to disagreement with the amount of compensation obtained constitute 33% of the total.
But did you know that professional or industrial liability policies have a greater number of exclusions in the risk coverage? It is essential to consult different offers from different insurance companies before taking out a policy. However, in general, this type of policy is usually subject to fewer guarantees.
Brokerages are companies that act as intermediaries between insurance companies and policyholders. They are vital elements within the sector because they are in continuous contact with all types of companies and civil liability policies.
ADECOSE (Spanish Association of Insurance Brokerages) has published a ranking of the best liability insurance. Its latest barometer has been developed based on the assessments of more than a thousand brokerages.
To measure their satisfaction index, they took into account the ability of insurance companies to respond efficiently to the needs of their policyholders. Berkley ranked first, closely followed by Markel, Zurich and Reale. You can see the full report here.
What are the coverages provided by liability insurance?
Liability Insurance for Real estate
It covers all those risks that derive from the insured person’s condition as an owner but also as a tenant. Within this consideration are also included all those titles of use or exploitation of real estate to implement the professional activity.
Operating liability cover also covers water, gas or electricity installations.
Liability Insurance for Advocacy spaces
In addition, all work carried out outside the company’s physical premises may also be covered, as well as any damage that may be caused to persons who are occasionally located within the company.
Professional activities and use of resources during work activities
Physical activities that take place during the working day are also susceptible to protection. The loading and unloading of goods or their transport and distribution can often lead to incidents that compromise the safety of third parties.
However, on many occasions, the personnel hired by the insured may also engage in negligent actions and behaviour that may put the safety of others at risk, and the policy also covers this.
Liability for damage caused by third parties
The insured may acquire commitments due to damage caused by intermediaries or external agents such as subcontractors. These types of incidents are also covered.
Expenditure incurred for legal defence needs
When the integrity or safety of third parties is compromised by negligence or omissions, you will most likely initiate legal proceedings to formalise the reparation of damages. Liability insurance covers the costs of judicial and extrajudicial defence.
They may include extra covers that offer certain additional security guarantees. The most common are:
Coverage for accidents at work
It offers protection against accidents that occur due to negligence on the part of the insured. You can also extend this protection to incidents arising from malpractice on the part of contractors or subcontractors.
Coverage of products, services and goods
A policy with this additional guarantee will protect all those products or services provided by the contracting party or his company. It extends the insured’s protection against damages that have been a direct consequence of his products, services or goods and that have compromised the integrity, safety or wellbeing of third parties.
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