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What is public liability insurance and do I need it?

What is public liability insurance and do I need it?
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If you run a business that comes into regular contact with the public, you might benefit from public liability insurance. Here’s everything you need to know about this type of insurance including who needs it and what it covers.

What is public liability insurance and what does it cover?

Public liability insurance is a type of insurance that covers you if a client, a contractor or a member of the public suffers bodily injury or property damage as a direct result of your business activities.

Examples could include:

  • A client tripping, falling and sustaining an injury at your workplace.
  • Your business putting up a public billboard and a piece of equipment falling and injuring a person on the street below.

Public liability insurance covers any compensation payment and legal expenses that might arise from such events.

One thing worth noting is that this insurance cover is strictly for third parties. It does not cover injuries to business owners or employees.

Who needs public liability insurance?

In business, even if you do everything correctly, there is always a chance that accidents can happen. With public liability insurance, you can work knowing that should the worst happen, any medical costs can be paid for and damaged property can be repaired or replaced.

To establish whether you need this insurance, ask yourself whether you would be able to afford any compensation costs, as well as any legal fees, if someone was to make a claim against you or your business. If your answer isn’t a resounding yes, then you might want to consider purchasing public liability insurance.

With that said, it might be worth taking out this insurance if you or your business regularly come into contact with members of the public in any of the following ways:

  • Your business has premises where members of the public visit (e.g. a beauty salon, restaurant or shop).
  • You work on clients’ sites as a tradesman (e.g. a plumber who carries out work in people’s homes).
  • Your work in an area that members of the general public can access or pass through and potentially suffer injuries or have their property damaged (such as a public street).

What is the cost of public liability insurance?

The cost of this insurance will depend on the nature of your business and the coverage level you select.

Generally, businesses perceived to pose a greater risk to the public will pay higher premiums. The simplest and quickest way to establish the potential cost of your insurance is to get a free online quote.

How much cover do you need?

The amount of cover you need depends on the kind of activities that you and your business carry out. Usually, insurance companies have cover plans of between £1 million and £10 million. 

Needless to say, you’re likely to need more coverage if your business has greater contact with the public. You might also need a higher level of coverage if the kind of projects that your business handles pose a greater risk of harm or injury to the public or damage to their property.

Is public liability insurance compulsory for businesses?

Public liability insurance is not compulsory by law except for a few businesses such as horse riding stables. However, many clients expect it to be in place as good business practice.

As mentioned by the Money Advice Service, some customers might actually want to see proof of adequate insurance before they do business with you. Some professional bodies may also require their members to have public liability insurance.

Ultimately, unless your business is required by law to have public liability insurance, the decision is yours. The thing to remember is that injuries and damage can come about any time you are in business. Insurance to protect you from compensation claims that might otherwise cripple or bankrupt your business is always worth having. 

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