Public liability insurance – who needs it?

June 12, 2024

Though it’s typically not a legal requirement (unless, for example, you run a horse-riding establishment), if you operate any kind of business, public liability insurance offers financial safeguards that could end up saving your very enterprise.

So, let’s take a closer look at why this widely employed insurance is sought by so many businesses and just what protection it brings.

What is public liability insurance?

The description penned by the Association of British Insurers (ABI) makes clear how wide-ranging are the protections offered by public liability insurance.

It typically indemnifies you against claims for property damage or physical injury (including death) suffered by anyone encountering your business – either at your business premises or through the activity (or failure to act) of your business.

You get some idea of the potentially critical value of that protection when you consider that property damage or injury could be suffered not only by your customers and clients but by anyone else who happens to be visiting your business premises, those participating in activities or events you may have organised, or among those who are simply watching any of those activities or events.

It’s for that reason some degree of public liability insurance is likely to be the prudent choice for just about any enterprise or business. The successful claims for compensation from the victims of property damage any physical injury (or even death) can prove expensive indeed – potentially threatening the future viability of your business.

What does public liability insurance cover?

If any third party – be that a customer, client, supplier, visitor to your premises, or even a passing member of the public – has their property damaged or suffers an injury because of your business activities, public liability insurance indemnifies you against the rightful claims for compensation. In the case of physical injury, those claims may be substantial.

Whether yours is a small or large business and in whatever sector you might be operating, the risk of these types of public liability claims is significant. From a relatively minor to a more serious accident involving any third party, the potential for substantial claims in damages is proportionately high.

The insurance typically covers not only the amount represented by the claim itself but also the legal costs associated with the proceedings brought by the third party – up to pre-set limits which will be defined in your policy schedule.

Who needs public liability insurance?

Incidents giving rise to public liability claims may occur at your own place of business, at your client’s premises, or at any other location. Clearly, these types of accidents can happen whatever the nature of your business but tradesmen – who are continuously out and about visiting customers’ homes and places of work – may be especially vulnerable.

For that reason, public liability insurance may be considered particularly useful for the likes of plumbers, electricians, gardeners, carpenters, and other tradespeople along with many shopkeepers, hairdressers, and salon owners.

Here are the key groups that typically need public liability insurance:

• Business owners: Any business that interacts with the public, clients, or customers should have public liability insurance. This includes retail shops, restaurants, cafes, and offices.

• Tradespeople and contractors: Plumbers, electricians, builders, and other tradespeople often work on clients’ premises and are at risk of causing accidental damage or injury.

• Freelancers and self-employed individuals: Those who provide services directly to clients, such as consultants, personal trainers, and beauticians, should consider public liability insurance to protect against claims. This may also include self-employed people who work from home but have business visitors.

• Event organisers: Individuals or companies planning events, whether they are small community gatherings or large corporate events, need public liability insurance to cover potential incidents involving attendees.

• Landlords: Property owners who rent out premises to businesses or residential tenants should have public liability insurance to cover accidents or injuries that occur on their property.

• Voluntary organisations and charities: These groups often interact with the public through various activities and events, making public liability insurance crucial for covering potential risks.

• Healthcare professionals: While many are covered by professional indemnity insurance, those with premises open to the public, such as private clinics, should also consider public liability insurance.

• Educational institutions: Schools, colleges, and training centres need public liability insurance to cover risks associated with students, visitors, and staff.

When your business has the protection of public liability insurance, that confidence can be shared with your customers, clients, suppliers, and members of the public. All can be reassured that appropriate compensation is available if the worst comes to the worst and they suffer property loss or damage or physical injury because of your business activities. That confidence and reassurance may enhance your trading position and the reputation of your business among your customers.

In fact, you may find that some companies will only work with you if you have public liability insurance. Some trade associations require you to have a valid liability policy before you can register with them.

Also, local government or council contracts typically require proof of public liability insurance with a specified level of coverage before they will engage in business with you.

What does it cost?

The cost of public liability insurance premiums is determined by the nature of the business in which you are engaged, the number of employees you have working for you, and the claims history of your business.

Premiums will also be determined by the level of cover you are seeking – the maximum amount you may claim concerning any single incident. Typically, this will provide indemnity of claims up to £2 million, £5 million, or even more depending on the nature and size of your business.

Protecting your business is simple and straightforward to arrange with Alan Blunden

Public liability insurance is not a legal requirement for all businesses in the UK, but it is highly recommended as it provides vital protection against potentially significant financial liabilities resulting from claims of injury or property damage.

If you have any questions relating to public liability insurance, or would like a quote, please do not hesitate to contact us on 01702 826060.