Do small businesses need public liability insurance?

If you own a small business in the construction industry, you probably already know you need to consider certain types of insurance. But what kinds of insurance do you need? This FAQ looks at whether one type of business insurance, public liability, is a necessity.

What is public liability insurance?

Public liability insurance is designed to protect you and your business should something you do (or fail to do) causes damage to a third party’s property or results in them being injured. The affected party could be a client or member of the public.

Public liability will cover incidents caused by your employees in the course of their work, which result in damage or harm to others. However, it does not cover an injury suffered by an employee.

Why does my business need public liability insurance?

First, you might find that being insured for public liability is a contractual requirement when working with large businesses and public sector organisations. Many trade associations may ask that you have it if you want to be a member.

Even smaller clients may want to see proof that you are covered before agreeing to contract you.

What may I need public liability cover for?

If someone makes a successful claim against you for damages and compensation, the costs can quickly add up.

For example, if a client trips over your tools and breaks their wrist as they fall, they may be unable to drive or work for months. They may also need to get taxis to attend hospital appointments.

You could be ordered by the courts to pay their lost earnings and the expenses they have incurred. There will also be legal fees to cover.

The time you take off work to deal with the case must also be factored in. 
As a result, it’s not unlikely that you’ll end up facing a combined bill for thousands of pounds. If you can’t pay, your business and assets could be at risk.

How much public liability cover do I need?

This will depend on the sort of work you do and how complex it is. However, it is typical for a small business in the construction industry to have public liability cover of between £2 million and £10 million.

How much does public liability insurance cost?

This will depend on a few factors including:

• how many employees you have
• how much cover you need
• the type of work you do
• where you work

The best place to start is to obtain a quote from an insurer, which you can often get online.