What is Public Liability Insurance?

Public liability insurance protects you against claims made by members of the public. This cover often comes as part of a package along with product liability insurance.

If your business premises is open to the public, or your business has any interaction with the public, it’s important you have this cover as part of your business insurance package.

Do I Need Public Liability Insurance?

Public liability insurance isn’t a legal requirement. However, many businesses see it as essential to protect them from potential high compensation claims. Some clients may insist you have it before engaging with you, as do some trade bodies and professional associations.

If you run a business, you should consider purchasing public liability insurance if:

• Clients visit your premises.
• You work on client locations.
• You work with the public (like a hairdresser).

Public Liability Cover Examples

Say, for example, you run a high street shop and you or an employee forget to put out a ‘wet floor’ sign, which results in someone slipping and hurting themselves or damaging their property, you could be hit with a lawsuit.

Or imagine you’re a hairdresser visiting a client at their home and you spill dye on their carpet. Or you run a restaurant with a takeout collection service and you overheat a coffee which causes severe burns to a customer’s mouth, you may well be sued.

Whether or not you take out public liability insurance is up to you as a business owner. But before deciding whether you need it, it’s important to consider whether you could afford the time and expenses associated with defending a claim if you don’t have this insurance in place.

What Does Public Liability Insurance Cover?

Public liability insurance covers legal liability if you or an employee are held responsible for damage, injury or death as a result of your business activities. It can include cover for:

• Property damage.
• Damage to possessions.
• Bodily injury.
• Death.
• Legal fees.
• Compensation costs.

This cover can include the cost of repairing or replacing possessions, legal fees associated with defending a case, and compensation claimed by the individual. This can include reimbursement for loss of work.

In the examples above, public liability insurance could cover legal fees and compensation. The value depends on your individual policy.

How Much Public Liability Insurance do I Need?

Each business is different, so it’s up to you to decide on the level of cover you need. There are several things to consider, such as the size of your business, the degree of risk connected with your job, and how much you're involved with the public. Some of your clients may also require a certain limit of cover before offering you work.

The level of cover is important as your policy will only cover costs up to the limit of the policy you take out. The options usually range from £1 million up to £10 million. Think carefully about: the size of your business, the level of risk associated with your work, and your level of involvement with the public before deciding how much public liability cover you need. It’s best if you seek advice from a specialist business insurance broker who can assess your risk and recommend a suitable level of cover.

What Does Public Liability Insurance Not Cover?

Public liability policies generally don’t cover accidents that happen to you, damage to your own property or property under construction. Incidents that affect your employees are also not covered – this would be covered by your employers liability insurance. In most cases, employers liability insurance is also a legal requirement if you have employees.

Damage or injury caused by your faulty or defective products are covered by a product liability insurance policy.