Do all businesses need public liability insurance?
If you run your own business, you will need to get the right insurance. There are different types of insurance for different things, so you may be wondering whether all businesses need public liability insurance.
What is public liability insurance?
Public liability insurance is a type of insurance that provides cover to you and your business in the event something your business does causes harm to someone or causes damage to their property.
This type of insurance covers incidents involving:
- members of the public, e.g. injured while walking past your construction site
- clients, e.g. damage caused to their car while it’s parked next to your scaffolding
Is it a legal requirement to have public liability insurance?
You are not legally required to have public liability insurance. However, you may find you are contractually obliged to have it as a term of your contract, particularly with larger or public sector organisations.
It may also be a requirement of some trade associations that you have public liability as part of your membership. Therefore, if you don’t have it, you will be in breach of contract.
However, being insured provides peace of mind. Having it also helps to establish you as a respectable business that takes its responsibilities seriously.
What happens if I don’t have public liability insurance?
You may lose out on larger contracts without public liability insurance and you may not be able to join a trade association.
If something does go wrong, you can be left with a bill of thousands, or even hundreds of thousands of pounds to pay in compensation and legal fees. You may also have to take time off work to deal with any legal proceedings.
Even a small incident, such as someone tripping over a tool bag, can result in a large claim for damages and compensation, particularly if the injured person needs to take time off work and have hospital treatment.
Damage to property can also add up. For example, if a plumber does something wrong which results in a leak that floods a client’s flat, as well as the flat below, they could end up facing two sets of claims.
Does it matter how I operate?
It doesn’t matter whether you operate as a self-employed sole trader, a small limited company or a partnership – insurance can provide essential protection for your business.
If something goes wrong and you can’t pay the damages, then your business and assets may be at risk. If you’re self-employed, that could mean your personal assets too.
Which trades and businesses need public liability insurance?
Any business that may come into contact with clients or the public may benefit from having public liability insurance. That includes:
In short, all types of trades and businesses.