Is business insurance the same as public liability?
Understanding the difference between terms used to refer to insurance products can help clarify what policies you may need to purchase to protect your business.
What is business insurance?
‘Business insurance’ is a broad term that covers a variety of areas.
For example, you can get business insurance to protect you against the cost of:
- damage to property
- equipment and stock
- employment disputes
- professional mistakes
- damage or injury caused to members of the public.
The four main types of insurance policy are:
- public liability insurance
- product liability insurance
- employers’ liability insurance
- professional indemnity insurance.
You may need all or just some of these insurance products as part of your overall business insurance.
What is professional indemnity insurance?
It protects you if you make a mistake that costs a client money. This is important protection for professionals who offer legal or financial advice and expertise to third parties.
What is employers’ liability insurance?
This protects you against claims brought by your employees, if they are injured, fall ill, or die as a result of working for you.
Employers are legally required to have employers’ liability insurance, even if the staff are voluntary.
Employers’ liability insurance covers the damages, compensation costs and legal fees that a current or ex-employee is entitled to.
What is product liability insurance?
It is a type of insurance product which protects you against the cost of a compensation claim if someone is injured, or their property is damaged, by a product you have sold. It will cover the legal fees and compensation costs.
Product liability insurance relates to products you sell, and sometimes products that carry your business name or that you repair. You are not legally required to have product liability insurance, but some of your contracts may require you to have it.
What is public liability insurance?
Public liability insurance protects you in the event work you or your business carries out causes injury or damage to a member of the public or their property. It is not a legal requirement, although some of your contracts may require you to have it.
If you have any contact with the public, it is strongly recommended. It will cover any compensation payment and legal expenses that arise from such events.
Are there any other types of business insurance?
There are other types of very specific insurance. These include commercial property cover (protection against damage to your building, contents, and any stock) and business interruption (protection against any loss you suffer if you cannot trade, for example if your premises are damaged).
What business insurance do I need?
It will depend on your business and circumstances. If you employ staff you must have employers’ liability insurance. If you are a tradesperson or run a small business, and you or your staff come into contact with the public, you almost certainly need public liability insurance.