Public liability for small businesses: your FAQs answered

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In the world of business, it’s better to be safe than to be sorry, which is why insurance is so important. UK companies spend an average of £118 on business insurance every year, protecting them from all manner of risks. 

Arguably the most crucial and common type is public liability insurance. However, there is still a lot of confusion around what it is and why it’s so vital. To help clear up some of the misconceptions, we’ve answered some of the most common questions about public liability insurance.

What is public liability insurance?

As explained by insurance provider Salon Gold: “Public liability insurance protects against claims related to injury or property damage caused to third parties, with your insurer (and not you) paying out for any related costs.”

It offers protection specifically for claims brought against businesses by non-employees (which is what employer’s liability insurance is for). Unlike professional indemnity insurance, which covers professional mistakes or negligence, public liability insurance protects businesses for accidents that occur either on their premises or during the course of their work. 

What exactly does public liability insurance cover?

How much coverage you get depends on your policy, but you’ll typically be covered for the following incidents:

  • Slips and trips – Public liability insurance would cover you if you left out a toolbox and a member of the public tripped over and hurts themselves, for example.
  • Property damage – Say you’re doing a job at a client’s house and accidentally spilled paint on their carpet, then you’d be covered. 
  • Damage to belongings – Similarly, public liability insurance protects you from damage to belongings like laptops or furniture. 
  • Food poisoning – If a member of the public becomes ill after eating food you prepared, you’d be safeguarded from any claims against you with public liability cover. 

Should any of these incidents occur and you get sued as a result, you could be liable for the costs of things like repairs, medical treatment and financial losses. With public liability insurance, however, the cost of compensation will be covered by your insurance provider. 

Is public liability insurance a legal requirement?

Unlike cover such as employer’s liability insurance, having public liability insurance isn’t a legal requirement. However, it is important to own because of the risks involved with running a public-facing business. Compensation claims arising from one of the situations above can set you back thousands or even tens of thousands of pounds.

Do I need public liability insurance?

You may not necessarily need public liability cover if your risk of being sued by non-employees is low. If you’re still unsure, the insurance is recommended if you fit into the following categories:

  • You work in public – If you work around members of the public, the chances of you being involved in an accident are higher.
  • You visit customers – The same is true if you need to visit customers or their properties to do your work. 
  • You have customers come to you – Likewise, having public liability insurance is a good idea if you regularly interact with customers on your own premises.

However, if you’re running a one-off event or only offering your services temporarily, then a temporary policy may make more sense. 

Common types of businesses that require public liability insurance include construction, beauty and events businesses. 

How much public liability insurance do I require?

How much public liability insurance you need depends on your exposure to risk, which is judged by things like how often you come into contact with the public and how dangerous your equipment is. 

Most insurers offer a minimum of £1 million worth of insurance and a maximum of £10 million, with the majority of businesses going for cover around the middle mark. Should you have multiple trades, you might be able to get them covered in one policy. 

How much does public liability insurance cost?

The cost of public liability insurance is affected by a range of factors, including your exposure to risk, how big your business is, and your claims history. Generally speaking, premiums start at around £50, though it often makes most sense to take out a more comprehensive policy that combines all the covers you need, like employer’s liability insurance, product liability insurance and business contents insurance

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