Public liability insurance

Public liability insurance provides financial security for small businesses and sole traders if someone is accidentally injured in your workplace, or if a claim is made against your business. If a member of the public is injured in connection with your business they could be entitled to claim a lot of money.

If you don't have the right cover in place, that claim could have to come out of your pocket, putting your business on the line.

It's good practice to have enough cover in place to protect yourself and your business against two types of claims that people might make: negligence that led to someone being injured or negligence that led to someone’s property being damaged.

Each policy will vary with different levels of cover, but most insurers offer cover for personal injuries, legal fees, compensation claims, and even death.

As a small business or sole trader, you might think that public liability insurance is an unnecessary expense, but it can be invaluable to your business if something goes wrong. It covers you against claims, legal costs and compensation if your business is not at fault.

Public liability insurance is worth considering if:

• You have an office that members of the public frequently visit
• Your business hosts events
• You work near the public or somewhere that the public has access to, like the street or walkways

There are many different scenarios where you might need public liability insurance. Here are a few examples:

• A plumber who is sued for damages caused by an accidental flood during a repair
• A customer who has a bad reaction to hair dye used by a hairdresser
• A builder who is sued by someone who trips over their equipment
• A window cleaner who breaks someone’s window.

In these kinds of incidents and similar situations, public liability insurance can help you resolve the problem.

No, public liability insurance is not a legal requirement. However, it’s highly recommended if you deal with the general public. A claim against your business can be extremely expensive, especially if it involves legal costs. It could even cause your business to go under.

Some contractors and other companies might also insist that you have public liability insurance before you can work with them. 

If you have employees, it is a legal requirement to take out employers liability insurance. 

As well as having details about you (your name, date of birth, contact telephone number etc.) and your business (company/trading name, trading address) to compare quotes you'll need the following information:

• Details of your turnover and employee wageroll
• Details of any previous claims
• Your renewal documents from your current insurer (if you have one)

The cost of public liability insurance can vary widely depending on the type and size of your business. Other factors such as the insurer you choose and your previous claims history can affect your price too.

Insurers will rate your business on risk, so you’ll pay higher premiums if your business is considered ‘high risk’. Businesses that use potentially dangerous machinery or deal with large numbers of the public can be classed as high risk.