Public liability insurance should be seen as an absolutely essential business expense. It’s an insurance policy that you purchase to protect your company and cover your legal costs and expenses if you have to defend yourself, and your business, against legal action.
There is a wide range of “wrongful acts” which could see a suit filed against you. This could be as simple as a customer tripping and falling when visiting you, or you accidentally causing serious damage to a client’s hardware during a site visit.
A standard policy would also cover any damages and costs that may be awarded if you are found responsible for an injury on another person (not one of your employees) while going about your business. It would also cover damage to their goods or property whilst you were going about your business.
It’s not a legal requirement to hold a public liability insurance policy but all sorts of business people would benefit from investing in a policy. That includes the self-employed, freelancers, charitable bodies and other enterprises that deal with members of the public.
What does public liability insurance cover?
As you can see in the example above, a wide range of people are covered by the provisos of a policy. At its most basic, a policy will cover your legal costs and compensation payments if your operation is found responsible for a loss or damage. That could be to anyone from a client to a contractor to a complete stranger.
In fact, claims can arise from accidents:
- Anywhere within your business premises;
- Your own home if you work from home and see customers there;
- A client’s property if you work on a mobile basis and go to visit them for professional services;
- Or at an activity operated off your normal premises if you’re organising it as part of your usual business.
As a result of a loss of industry, there are a number of costs which a claimant might try and find you responsible for. These may include:
- Their loss of earnings if they are temporarily or permanently unable to work;
- Medical fees if they have needed to seek treatment as the result of an injury;
- The cost of fixing the damage you caused, or the cost of replacing an item altogether;
- Both your company’s and the claimant’s legal expenses.
A public liability policy will cushion the blow of all of these, up to a certain amount agreed when you take it out. This is usually a high figure but will scale according to the size of your business. Cover of one million pounds and over is not unusual.
It is important to note, however, that public liability insurance does not cover you against any death, injury or loss to your employees. That sort of coverage requires a separate policy, known as employers’ liability insurance.
What sort of incidents lead to public liability insurance claims?
There are two types of claim which public liability insurance commonly covers. These are:
- Where a visitor has hurt themselves – often by a slip or trip – on a business’ premises and they believe the company was negligent in preventing that injury;
- Where a visitor’s property is lost or damaged while visiting a business premises. This could be something unfortunate that occurs during the course of a meeting, such as an expensive device being knocked onto a hard floor and smashed.
The first of these cases can be highly distressing for the business owner. And if the claimant proves their case then the total costs of legal advice, loss of injury or compensating someone for a permanent disability can leave uninsured business owners looking for tens or even hundreds of thousands of pounds.
Do I need public liability insurance?
Public liability insurance is designed with companies that regularly interact with the public in mind, although there’s no legal requirement to have it – unlike Employers’ liability cover.
PL cover is often taken out by businesses who welcome people to their premises or go into their clients’ homes, such as plumbers, hairdressers, restaurant owners or people running shops.
You may also find you need a policy of at least £5m if you want to bid for certain contracts in the public sector.
If you provide professional services to clients (e.g. as a contractor or consultant), you may find that some clients will only do business with you if you have public and employers’ liability in place, and possibly Professional Indemnity Insurance.