How much should public liability insurance cost? 

Is it essential to have public liability insurance?   

Public liability insurance protects you and your business if someone succeeds in bringing a claim against you for damage or injury caused by your work activities.  

It’s strongly recommended that small businesses take out a policy. A successful claim has the potential to cause financial ruin. 

How much is a claim against me likely to cost?  

The amount of damages and compensation awarded will vary, according to the circumstances.  

A mild ankle injury could attract damages of up to £12,000. A slightly more serious injury that requires a lot of medical treatment, like a fracture, could attract damages in the region of £45,000. And that’s before legal fees and lost earnings are included.  

How is a public liability insurance premium calculated?  

A number of factors need to be considered.  

The first is to decide what level of cover you need. This will mean selecting from a range of insurable values: £1 million, £2 million, £5 million or £10 million. These figures represent the maximum the insurer will pay out for a claim. 

It is worth noting that you will not necessarily cut the cost of your insurance in half by opting for £1 million in cover instead of £2 million. This is because other considerations are involved when calculating your premium.  

What other factors are taken into account?  

The industry or trade you are in is important. For example, businesses operating in the construction industry are normally considered a ‘high risk’ due to the nature of the work. You’ll end up paying more for your premiums than, say, a newsagent.  

Other factors include the size of your business (i.e. the number of employees), your business structure (whether it’s a limited company, a partnership or a sole trader), your turnover and the size of the projects you take on.  

How much is it likely to cost? 

To provide an accurate quote, an insurer will need specific information about your business – like that mentioned above. As a very rough guide, a small business in the UK normally pays between £50 and £450 a year, with the average being £118.