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Running a small or micro business means you will be managing numerous overheads and unplanned expenses. Therefore, it makes good commercial sense to resist taking out unnecessary insurance policies. 

However, as a business owner, you should protect your company against claims for personal injury or property damage caused by yourself or your employees when at work.

Investing in Public Liability Insurance is one cost that should not be neglected and could save you tens of thousands of pounds should a claim be brought against you.

In this article, we discuss why Public Liability Insurance is important and whether it is the right type of business insurance for your company.

What is Public Liability Insurance?

Public Liability Insurance protects all types of businesses, including sole traders, partnerships, and limited liability companies, against being sued by a member of the public (including contractors) for personal injury or property damage. 

For example, suppose you slip on a shop floor and break your leg. In this case, it is not the shop owners that will pay out any damages awarded to you in a compensation claim but their insurance company, assuming they have Public Liability Insurance. 

Public Liability Insurance also covers the cost of legal fees if your business is sued for personal injury or property damage.

Who needs Public Liability Insurance?

Public Liability Insurance is not a legal requirement; however, it is important that if your business interacts with the public in any way, you have insurance to cover the cost of any potential compensation claims. 

Certain trade bodies, investors, and companies advertising tender applications will require your organisation to have Public Liability Insurance for their business activities.

What does Public Liability Insurance cover?

Depending on the level of cover, Public Liability Insurance covers your business for compensation payments and legal fees if your business is found responsible for someone being injured. 

The affected person could be a member of the public, a customer, a client, a visitor to your workplace premises, or a contractor. It also covers your business if it is found liable for property damage.

You will need additional types of insurance to ensure you are fully covered against possible claims against your business: 

  • Employee Liability Insurance -  is a legal requirement for all employers and covers personal injury claims by employees
  • Business Interruption Insurance -  will pay out funds to cover regular overheads and lost profits if you cannot trade for a period due to a significant event such as a fire or flood
  • Professional Indemnity Insurance - will provide cover if a client brings a claim against your business for negligent work or you make a mistake that causes the client to suffer loss

How do I get Public Liability Insurance?

There are several ways to apply for Public Liability Insurance. Most insurance companies have a website, and you can apply online. 

If you require a big policy, you may prefer to talk through your options with an insurance broker who works with various companies and understands what type of public liability cover you need, and which insurer will provide your business with the best value.

What should I consider when choosing a Public Liability Insurance policy?

Before committing to a Public Liability Insurance policy, you must look at your business and conduct a risk assessment. Things to consider include:

  • Do members of the public, contractors, and/or suppliers regularly visit my business premises?
  • Are there hazardous materials onsite, for example, harmful chemicals, dangerous equipment, or toxic substances?
  • What are the most common types of workplace accidents, such as slips, trips, and falls, occurring either at my business’s premises or at a location where one of my employees is working?
  • Do my clients include children, vulnerable adults, and/or elderly people?
  • Do my contractors/subcontractors carry their Public Liability Insurance?

You will also need to consider the number of employees you have and the turnover of your business as these will affect the insurance cover you require to protect your business.

Most Public Liability Insurance policies range from £1 million to £10 million. It is essential to read the insurance policy thoroughly as some work may be subject to exclusions or endorsements. 

A typical example is a ‘work at height’ restriction. If your business is in the construction or scaffolding industry, you may have no cover for many of your regular jobs. 

Is professional indemnity insurance the same as Public Liability Insurance?

These types of insurances are different, professional indemnity insurance provides cover for legal costs and compensation awards if a customer or client brings a claim against you or your company for inadequate and/or negligent work. Always that this work has resulted in them suffering financial loss.

Do I need Public Liability Insurance as a Sole Trader?

If you work with the public or have people who are not employees visiting your workplace premises, then you need Public Liability Insurance even if you are a sole trader or have a limited company

Get legal assistance from LawBite

Public Liability Insurance can provide peace of mind in case someone sues you for a personal injury or property damage resulting from work carried out by your business.

LawBite has experience helping startups and small businesses achieve their commercial ambitions and regulatory compliance. To find out how we can support you to choose the right type of insurance for your business, book a free 15 minute consultation or call us on 020 3808 8314.

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In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.