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Public liability insurance

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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.

What does public liability insurance cover?

While it might differ slightly from policy to policy, public liability insurance will usually cover:

  • Compensation payments you're ordered to pay. This could include compensation claims from clients, suppliers, contractors or passers-by.
  • Replacement or repair of property if your business is found to be liable for damage. You'll usually have a set amount you can claim for.
  • Medical fees your business is found liable for. Even if the treatment was provided by the NHS, you could still be chased by the NHS itself for any expenses you're liable for.
  • Legal expenses as a result of defending a claim for compensation from members of the public, including claims made by customers and suppliers.

There are a few things that typically aren’t covered, however. These are usually:

  • Injuries you suffer as public liability is designed to cover claims for injury to others and their property, not you and yours.
  • Damage to your property as it’s designed to cover third parties and their property, public liability insurance won’t protect your own property.
  • Your employees and their property, as you'll need employers’ liability insurance if you want cover to protect against compensation claims made by your employees.
  • Damages as a result of your work, eg. from poor advice you gave, or due to negligence on your part. For this, you'll need professional indemnity insurance.

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

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How much is public liability insurance?

The cost of public liability insurance can vary widely depending on the type and size of your business as well as the level of liability insurance coverage you choose.

Other factors such as the insurer you select and your previous claims history can affect your price too.

Insurers rate your business on risk, so you pay higher premiums on public liability insurance 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.

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.

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