Public liability insurance

What is public liability insurance?

Public liability insurance covers your business if it’s sued by a member of the public.

This could be due to someone – possibly a customer, supplier or even just a passer-by – suffering an injury, damage to their property or even dying .

Public liability insurance can cover legal fees, compensation pay-outs and hospital bills your business might become liable for as a result.

Do I need public liability insurance?

Public liability insurance isn’t a legal requirement, but it’s highly recommended. Public liability insurance is especially relevant if your business interacts with the general public on a regular basis. Even if you don't think it does, bear in mind that most businesses do have at least some contact with the public, including third parties like suppliers, customers or contractors.

Without liability insurance, claims from third parties can be extremely expensive for your business just to defend, even if it isn’t at fault. If the worst were to happen and a big compensation pay-out is awarded against your business, then everything could be in financial jeopardy.

Here are a few examples where public liability insurance can offer protection:

• 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 visitor who slips over in your offices and breaks their wrist due to a wet floor not having a warning sign

How much public liability cover do I need to get?

You should think carefully about how much public liability cover you need to buy. At the lowest level, public liability insurance policies start with around £1 million of liability insurance coverage.

It might sound a lot, but legal costs and an actual compensation pay-out due to a successful claim can be eye-watering.

• If your business is high risk, you may need quite a bit more than £1 million of liability insurance coverage, perhaps even £10 million.

• If your business doesn’t interact with the public regularly, you may decide £1 million in liability insurance cover is enough.

The trade body for your industry may guide to a certain minimum level of public liability insurance for businesses like yours. You should also check your contracts with clients in case they require your business to have a certain minimum level of liability insurance in place.