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Public liability insurance

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What is public liability insurance?

Public liability insurance is a popular type of business insurance.

It provides cover for legal and compensation costs in relation to a claim made against a business due to injury or property damage inflicted on a non-employee – ie a member of the ‘public’ – including clients, contractors, or anyone else who is not a member of staff.

Fundamentally, it works like third party car insurance - protecting your business against damage claims by third parties the way car insurance does for any accidents you may have while driving.

What does public liability insurance cover?

Public liability insurance covers legal costs (eg lawyers’ fees or costs associated with court attendance) and compensation costs in relation to claims made against you due to your business causing injury or property damage to a third party.

Does your business need public liability insurance?

Although it’s not a legal requirement for businesses in the UK, public liability is a popular cover for other valid reasons. 

Three key reasons are: 

  • If you’re a member of a trade association or professional body, they may require you to have it

  • A client may require that you’re covered as a condition of work

  • The cost of a potential claim may well bankrupt your business – for many business owners, this reason alone is not worth the risk of going without cover

What does public liability cover you for?

One of the simplest ways to think about what public liability covers is to think about accidents. 

Seemingly small mishaps – from a slip on a freshly cleaned floor, to a trip over a poorly placed cable – have the potential to cause severe bodily injury and property damage and could lead to a lawsuit against your business. 

What's not covered by my public liability insurance?

While public liability is one of the most popular types of insurance for businesses, it’s important to remember that it’s just one of many types of cover available and is best combined with other policies to provide your business with protection. 

The main point to remember is that public liability only concerns your liabilities in relation to injuring or damaging the property of third parties and does not cover things such as injury or damage to your employees, or damage to your own property. 

These can be covered by different types of business insurance. 

How to get the right public liability insurance coverage

Getting the right combination of liability insurance starts with assessing the risks your business faces. 

How much does public liability insurance cost?

The cost of public liability insurance will vary depending on a number of factors, including things such as: your turnover; number of employees; industry; business location.

Public liability insurance starts from as little as £50 a year, but a recent study found the average amount paid by a small or medium sized firm was about £120. Higher risk SMEs can pay £450 a year or more.

Getting an online quote is the best way to gauge how much yours will cost – and it takes less than 10 minutes. 

What other types of business insurance are there? 

Other popular types of business insurance include, but are not limited to: 

  • Employers’ liability insurance, to cover legal and compensation costs associated with a claim made against you by an employee, due to injury or property damage.

  • Professional indemnity insurance, to cover legal and compensation costs associated with your business’s failure to meet contractual obligations with clients.

  • Business contents insurance, to cover items such as computers, documents and even cash in the event of theft or damage.

  • Directors’ and officers’ insurance, to cover claims made against company directors or officers.

  • Cyber insurance, to cover your business’s liabilities for data breaches involving sensitive customer information such as credit card numbers, passwords and personally identifiable information (PII).

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