Why is public liability insurance important?

In this video, part of our Public Liability FAQ series, we answer the question ‘Why is public liability insurance important?’.

The potential costs and consequences of not having public liability insurance are serious and significant. Understanding why adequate protection is vital could save your business down the line.

What is public liability insurance?

It protects your business if someone successfully brings a claim against you for personal injury or damage suffered because of your business operations.

Why do I need public liability insurance?

Although you are not legally required to have public liability insurance, you should have it if you come into contact with the public. Even with the most detailed risk assessment and care, accidents happen.

A successful claim against your business could add up to many thousands of pounds. For example, if a customer tripped on a piece of your equipment and broke their ankle, they might claim against you for lost wages (due to an inability to work), transportation costs to and from hospital, legal fees, and more.

Public liability insurance will also save you the time, complexity, and stress of dealing with the legal system. Your insurer will allocate a lawyer to deal with a claim on your behalf.

Is public liability insurance important for my clients?

Many organisations and large companies will not enter into a contract with a business that does not have public liability insurance. This is particularly true in the construction industry and with public sector organisations.

If you want to attract large clients and decent-sized contracts, having public liability insurance will be a requirement.

Does my trade association require me to have insurance?

This will depend on your professional body. However, many trade associations do request that you have public liability insurance before you can join.

What about my business reputation?

When trading as a small business or tradesperson, reputation is everything. You may get a lot of work through word-of-mouth referrals.

Potential clients may check to see that you are reputable before giving you their custom. They may do this by asking to see your public liability insurance certificate, or visiting your website to find evidence of you having one.

You will appear more professional and trustworthy if you are insured. Larger clients will also know you are less likely to go out of business if faced with an insurance claim.