How can they prove you're liable?

If you ask your Elders Insurance agent which type of cover is the most important for business owners, they'd probably say business liability insurance.

This will protect you if and when you are held responsible for an injury suffered by a third party, or damaged caused to a third party's property.

But, how can they prove you're responsible?

While the rules are different in every state and territory, the following holds true in New South Wales.

According to the Civil Liability Act 2002 (New South Wales), the onus of proof is on the third party. In other words, they have to provide evidence that you were responsible for any injury or damages they received.

In order to decide whether you were, in fact, the reason the third party came to harm, the court will take a number of factors into consideration.

First, they will need to figure out if you were negligent or not in your duty of care to the third party.

To do this, they must determine if the risk the third party was exposed to was foreseeable - in other words, if you knew or ought to have known they would be in danger if they undertook whatever activity caused them to suffer an injury.

They will also look at whether a "reasonable person" in your position would have taken precautions to make sure no harm came to the third party.

If it can be proved that you weren't aware of the risk or can't have been expect to take precautions, you cannot be found guilty of negligent behaviour.

The court would also have to determine that any negligent behaviour on your part was directly responsible for the harm caused, and whether the injury or damages would have taken place had you not been negligent.

A business insurance policy will make sure you're prepared, no matter which way a liability claim goes.