Public liability insurance

Protecting your business interests against any claims that could come your way is essential. Alongside employers’ liability insurance – which covers the compensation and legal costs should you be held liable for an employee’s illness or injury – it’s important to be prepared for any claims brought against you by a member of the public too. After all, any visitor to your business premises, whether they’re an electrician, a courier, a customer or a member of the public, can make a claim against you if they are injured or their property is damaged as a result of your business activities, which is why public liability insurance is vital. 

Public liability insurance is a form of cover that protects your business from any compensation claims and associated legal costs if you’re found to have caused injury or damage to a third party or their property, whether on your own premises or off-site. It’s the responsibility of the business owner to make sure any claim for compensation from a third party is met, and business public liability insurance can ensure you’re able to meet your financial obligations.

No, public liability insurance is not a legal requirement, but it’s still highly recommended to take out suitable cover – and in many cases it can be impossible to trade without a policy. Indeed, clients may stipulate that they expect a certain level of cover before they’ll do business with you, and in some sectors (such as the public sector) you’ll almost certainly require it, which is why a lot of business owners view it as an essential form of business insurance.

It’s important to point out that even if you don’t have an office or premises, if your business involves work on-site or at a third party’s premises, you’ll still need to consider public liability insurance, purely to protect your interests should an accident occur that’s viewed as your fault. There’s also an exception to the not-a-legal-requirement rule, and that’s if you run a horseriding establishment, in which case you’re legally obliged to have suitable cover.

Public liability insurance will cover you for any incidents that occur on your business premises as well as off-site, such as at events or activities that you’ve organised. It’ll cover compensation claims made by anyone you interact with during your business dealings (be they customers, clients, people visiting your business premises, or even those at an event), as well as the cost of repairs, medical bills and any legal costs that could be incurred.

It doesn’t cover claims made by employees, however – this is where employers’ liability insurance comes in – and nor does it cover accidents that happen to you or any damage to your own property. You’ll need to make sure these are included in a wider business insurance policy instead.

Minimum levels of public liability cover typically start at around £2 million, though if your business is deemed high risk, you’ll want to opt for a higher level of protection, with up to £10 million in cover usually available. Remember that the compensation amount could include loss of earnings, future loss of earnings, damages awarded to a claimant and any legal expenses you could incur if you are found to be liable (up to certain limits), the costs of which can quickly escalate, so the amount you’ll need to insure against could be significant.

This will depend on various factors, including the size of your business, the industry you operate in and the risk you pose to the public, as well as your health and safety record and previous claims history. If you’ve got a labouring business and/or use a lot of dangerous machinery, your premiums are likely to be higher than if you run an office-based company with minimal visits from the public.

The fact that there’s no one-size-fits-all policy means it’s vital to spend the time comparing the options thoroughly, sourcing quotes from several different providers to ensure you’ve got the level of cover you need at a price you want.