Public liability insurance protects you in the event of third party injury or damage to property as a result of your negligence. If you regularly interact with clients or customers, either at their place of work or yours, you should consider taking out public liability insurance although for most businesses it is not legally required.
What is public liability insurance?
Public liability insurance provides cover in the event of injury to third party personnel or damage to third party properties as a result of your own negligence. Policies are designed to pay the cost of damages and associated legal fees, as well as hospital treatments and ambulance costs which the NHS can legally claim back from at-fault parties. Public liability insurance only covers claims from third parties – employees do not count as third parties and you would need to take out employer’s liability insurance if you employ staff.
Is public liability insurance mandatory?
For most businesses public liability insurance is not a legal requirement, but is strongly recommended. The associated costs of third party claims can easily bankrupt even the most stable company. Horse riding establishments are legally required to have public liability insurance due to the inherent risk of injury. Companies operating in certain sectors may find that clients will only do business after they have seen proof of public liability insurance.
How much cover do I need?
Generally speaking most policies will provide between £1m and £5m in cover. £1m should be regarded as an absolute minimum and businesses are advised to opt for a company that provides at least £5m. If you work as a sub-contractor you may be required to extend your cover to £10m – speak to your insurer for more information.
Basic public liability insurance does not cover defective products or design; these scenarios can get extremely expensive if a significant number of third parties are affected. If you feel you’d benefit from this cover, ask your insurer how much it would add onto your premiums. The reach of your products, and any innate predisposition to cause injury (extreme sports goods, for example) will be factored in.
How much does it cost?
Public liability insurance premiums depend significantly on the size of your business, the number of people you employ, the industry in which you operate and the amount of activity your business participates in (generally estimated by turnover). Expect premiums to range from about £60 for the smallest businesses to many thousands of pounds for active companies in dangerous industries.
Contact a professional
Companies should be aware of precisely what is covered when taking out public liability insurance, particularly if their business case is unorthodox. If you are not confident studying the policy underwriting yourself, contact a specialist insurance broker who will be able to source a policy that fully suits your needs. Ensure your broker is a member of the British Insurance Brokers’ Association (BIBA). When you’re ready to take out a policy, make sure your insurance company is accredited by the Association of British Insurers (ABI).
Any company that employs staff is legally obliged to take out employer’s liability insurance, which protects you in the event of an employee being injured whilst at work. Find out more about employer's liability insurance here.