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.
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.
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
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.
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.
Getting the right combination of liability insurance starts with assessing the risks your business faces.
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.
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).
No, public liability insurance is not a legal requirement for businesses in the UK.
Yes, whether you’re a sole trader, partnership or limited company, all types of business can get public liability cover.
No, public liability insurance covers injuries to anyone who isn’t an employee. For employees, you’ll need employers’ liability cover.
This depends on the type of claim you’re making.
In many cases it’s a no, but some types of claims may require you to pay an excess.
Property damage claims, for example, can have an excess of £250 (which is what you’ll need to pay yourself).
This depends on you.
You’ll be able to pick from a range of limits - ie £1 million, £2 million, £5 million and so on - for public liability cover.
If your needs change, you’ll frequently be able to add or remove cover free of charge – just remember to give your provider plenty of notice first.
Some good ways to figure out how much cover you need is by looking at:
Whether any professional or trade bodies you belong to require a minimum level of cover
What other businesses in your industry typically take out
Yes, your public liability insurance should cover you at a clients’ premises or elsewhere – so long as you’re carrying out business activities.