What is public liability insurance?
Public liability insurance covers your business in respect of legal claims made by someone for something your business has done (or not done) which resulted in personal injury, death, loss, or damage.
As a business, you can find yourself facing a claim for any number of reasons. If your work regularly brings you into contact with the public, you should consider taking out a policy.
What does public liability insurance cover?
When caused to a member of the public, client, or contractor, because of something you have or have not done. If the injured person has had to take time of work, or is no longer able to work, your policy may cover their loss of earnings.
Damage to property
This may include damage to clothing and possessions.
When someone brings a claim against you, you nearly always need a lawyer. Even if you admit fault straightaway, there will be legal fees involved. If the case is complex or contested, these costs can add up to a lot.
What is not covered?
Public liability insurance is not the same as professional indemnity insurance or employers’ liability insurance. That means it does not cover you against claims for loss or damage by your employees, nor costs that arise if you have made a mistake or are negligent with work for a client that causes them loss.
Who can make a claim?
It could be a client or customer, a contractor, or a member of the public – either for themselves or in respect of their property.
What situations might lead to a claim?
Anything that leads to an injury or loss, which could reasonably be proved to be your fault due to something you did or did not do.
Example: Accident in a shop
If a customer slips on the floor of your store and suffers a back injury, and a warning notice that the floor was wet was not displayed (i.e. something you did not do) it could lead to a claim against you.
The claim itself could include compensation for the injury and loss of earnings, or any other loss which the person suffered as a result.
Example: Construction site accident
If you accidently dropped a piece of equipment from scaffolding which caused injury or damage to someone or something below (i.e. something you did do) this may result in a claim.
Depending on the circumstances, the claim could be for personal injury, damage to clothing, or damage to a vehicle.
Is public liability insurance required?
For most businesses, it is not a legal requirement to have public liability insurance. That does not mean you can ignore it, as a claim could still be brought against you.
Does the work I specialise in make a difference as to whether I need it?
If your business provides a skill or service which involves coming into contact with the public, then you should consider public liability insurance – irrespective of what kind of business it is.
Even if you do not work with or around members of the public, accidents can still happen. If you are in any doubt, check with your trade body or association as to what is standard within your industry.
Is it normal for larger clients to insist on public liability insurance?
Some sectors and clients will require you to have a certain level of public liability insurance before they will work with you. This is common among construction and public sector projects.
Having public liability insurance in place will signal to potential clients that you adopt a professional approach and can be trusted to work responsibly.
Is public liability insurance worth the cost?
Yes. Claims for injury or damage can run to many thousands of pounds. They have the potential to put small businesses in serious financial difficulties.
Before you dismiss the idea of insurance, ask whether it is worth the risk not to have cover.
What level of cover do I need?
This will depend on the nature and size of your business, and the risks associated with that work.
Some public sector bodies and clients in construction will require at least £5m public liability protection.
For most tradespeople and small businesses, somewhere between £1m and £10m will be appropriate.
The greater your exposure to the public, and the perceived risk associated with your trade, the more cover you are likely to require. For example, a construction business is likely to need higher cover than a painter and decorator.