Is it law to have public liability insurance?
The law doesn’t require you to have public liability insurance, but that doesn’t mean you don’t need it in certain circumstances. The only compulsory insurance cover you need is employers’ liability insurance if you employ staff (even if they are volunteers).
What does the law say if I’m self-employed or working as a sole trader?
Again, you are not legally required to have public liability insurance. However there are circumstances where you will still need it. If you employ anyone, you will need employers’ liability insurance.
What are the circumstances when I need public liability insurance?
There are three situations in which the law may not require you to have public liability insurance, but you may still need it:
If you come into contact with the public
If you work with the public, or come into contact with the public, it’s important that you have the appropriate insurance.
The types of trades and businesses typically affected include: decorators, plumbers, electricians, painters and decorators, builders, and store owners.
Why is it important?
If a member of the public suffers injury or damage as a result of coming into contact with your work, they may be able to bring a damages and compensation claim against you personally (if you are a sole trader) or your business (smaller limited companies).
Even a small incident can result in a substantial claim. Along with legal fees, this could be financially devastating for you and your business.
Public liability insurance will protect you if a claim is made against you.
If your contract requires it
Some large companies and public sector organisations will require their contractors to have public liability insurance as part of their contract. If you want to do business with such organisations, you will need to have it or you will be in breach of your contract.
If your public liability insurance policy has expired, you will need to renew it in order to keep these types of contracts. Breach of contract may allow the other party to end the contract. In some cases, they could bring a claim against you for breach of contract.
If your trade association requires it
Many professional trade associations require their members to have public liability insurance. If you don’t have it, you may not be allowed to become or remain a member.
Not belonging to your trade’s association can affect your reputation as a professional tradesperson or business. This may mean that you cannot use the trade association logo in your advertising.