Public liability insurance

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    Chris Godfrey

    Page written by Chris Godfrey. Last reviewed on May 16, 2024. Next review due April 6, 2025.

    Accidents that cause personal injury or damage to the property of the general public or your clients, customers, and suppliers as a result of the services your organisation provides, could have a huge financial impact on your business, or even close your business down. However, public liability insurance is designed to protect against this sort of risk – providing compensation to claimants in the event of any mishap and giving business owners peace of mind. 

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      What is public liability insurance?

      Public liability insurance is a type of business insurance that protects your organisation if someone is injured, or their property is damaged because of the services that you or your business provides. This type of cover, also known as PL or Liability Insurance, is designed to protect your company against third-party claims for injuries or property damage from a customer or client, passer-by, or a visitor to your business premises – whether you’re at fault or not.

      Read more: our detailed guide on what public liability insurance actually is.

      Does my business need public liability insurance?

      Public liability insurance is a good idea for almost all businesses, (including sole traders and the self-employed), and especially those that interact with the general public and work for local councils or central government. Some personal injury or property damage claims can run into the hundreds of thousands of pounds. If your business operations put your organisation in a position where a customer, client, supplier or a passing member of the public (even in or on a vehicle) could suffer injury or damage to their personal property, then you need PL to protect your business against the potential of crippling financial claims. Additionally, some customers may demand that you have public liability insurance before contracting with your company.

      Businesses that typically require PL to operate safely include:

      Is it a legal requirement?

      No, public liability insurance is not a legal requirement, but the potential losses from not having it can far outweigh any premium savings you may obtain.

      How does public liability insurance work?

      Public liability insurance is a defence against claims resulting from accidental personal injury or property damage incurred by third parties in the provision of the services your business provides. The PL claims process involves:

      Notifying your insurer of claims

      In the event that a third party makes a financial claim against your business for personal injury or property damage, you should immediately notify your insurer, providing the following information:

      1. Your name and company details 
      2. Your insurance policy number and contact details
      3. Details of the person or entity claiming against you
      4. Details of the incident including: the date, time and place it occurred, how it happened, details of damage, estimates of damage repairs (if possible).

      Negotiation of settlement

      After receiving your information, your insurer will investigate the claim and if it has merit, calculate a settlement amount to include in an initial offer of compensation. The claimant may accept this offer or make a counter-offer, resulting in settlement by mutual negotiation. Either way, you will not be responsible for paying the final compensation amount beyond any excess that you have agreed to pay. 

      What is insurance excess?

      Most public liability insurance policies will ask you to pay an agreed portion of any claim – typically £500 or £1000, but possibly more. This is called the ‘excess’ sum. Generally, the higher the excess you agree to pay, the lower your premium costs will be.

      How much cover do you need?

      The amount of public liability insurance you need depends on the industry you work in, (is it high risk), and the size of your contracts or sales. In most cases, the bigger your sales are, the higher potential claims may be. (Keep in mind that a claim for personal injury or property damage will usually be increased by added legal fees and other clerical costs). If you work with government departments or local councils, you should consider a policy of up to £5million, although minimum cover levels typically start at around £1million, which is more suitable for small businesses, sole traders, and organisations that have less contact with the public. 

      How much does it cost?

      The cost of public liability insurance is determined by the type of industry you work in, and the risks associated with the services you deliver. Higher risk means higher cost. Businesses that provide labour services, such as plumbers, electricians, and carers, will usually have more risk than organisations that provide online or clerical services. This difference will be reflected in the cost of the policy. 

      What does public liability cover?

      Public liability insurance protects your business from financial loss if someone is injured, or their property is damaged because of the work that you or your business provides. 

      What’s covered:

      • Personal compensation – for the injury or death of a third party, including the loss of earnings and future loss of earnings.
      • Medical fees – including the cost of calling out an ambulance, treatment and a stay in hospital for the claimant.
      • Repairs – including the cost of labour and materials.
      • Legal costs – including the cost of defending you against a claim and the claimants’ legal costs if you’re found to be at fault.

      What’s not covered:

      • Accidents that affect your employees or their possessions – if you employ anyone, you must have employers’ liability insurance by law. This covers anything that might happen to your employees.
      • Accidents that happen to you or damage to your own property – protection for yourself or your business premises is usually covered under a general business insurance policy.

      What other types of business insurance should I consider?

      Accidents, errors and omissions can happen at any time and their impact could bring crippling costs to your business, or even cause you to cease trading. To eliminate this kind of worry, businesses will typically take out a range of insurance protections, including:

      Professional indemnity insurance

      Professional indemnity insurance, also known as professional liability insurance, is an essential type of cover for businesses that advise clients, help them navigate complex financial or legal affairs, or provide them with vital information that is published in the media. In these kind of cases, errors can cost thousands or even millions in legal compensation claims. Professional indemnity (PI) can protect you if a client makes a financial loss because of your work and then makes claim against your business. Trade associations, government bodies, public institutions, and major customers will often require proof of a minimum level of PI insurance before doing business with you.

      Employers’ liability insurance

      Under the Employers Liability Act of 1969, employers’ liability insurance (ELI) is a legal requirement for most UK employers. ELI protects you and your employees, (including those who no longer work for you), should they be injured or become unwell as a result of working for your business. ELI typically covers the associated legal and compensation costs, and other damages of such events, but it can also cover accidental injury or damages caused by an employee to a third party, like your customers. 

      Business contents insurance

      Business contents insurance is designed to replace the contents of shops, offices, surgeries, garages, workshops and almost every other type of business in the event of fire, flood, theft, and accident. Contents insurance can replace lost cash, and pay for new fixtures and fittings, equipment, stock and samples, raw materials, and employees’ personal belongings if they’re damaged, lost, or stolen. 

      Industry-specific insurance

      Some UK sectors require participating businesses to carry industry-specific insurance. This will usually relate to business activities and risks unique to that sector or profession. If you are unsure about your need for this kind of cover, you should check with your industry body to find out what insurance policies they insist, or recommend you hold. For example, solicitors are required to carry an insurance policy in order to practice law.

      Product liability

      Product liability insurance (PLI) can protect businesses from financial loss in the event that someone is harmed, or property is damaged due to products that they supply. PLI protects against claims for:

      • Personal injuries caused by faulty product(s)
      • Loss of or damage to property caused by faulty product(s)
      • Unforeseeable circumstances such as product faults that quality control systems could not reasonably identify or foresee.

      Tools insurance

      Tools insurance covers the cost of replacing business tools if they’re lost, damaged, or stolen. Tools that are typically covered include:

      • Handheld tools (hammers, screwdrivers, saws, pliers)
      • Power tools (drills, sanders, angle grinders, nail guns)
      • Plant equipment (excavators, rollers, diggers, dump trucks)
      • Owned, loaned, leased or hire-purchased/leased tools.

      Public liability insurance FAQs

      Do I need public liability insurance if I’m self-employed?

      If your business brings you in contact with the general public, or you work in a high-risk sector such as construction, you need public liability insurance even if you’re self-employed or a sole trader.

      Is public liability insurance a legal requirement?

      No. But the potential losses from not having it can far outweigh any premium savings you may obtain. 

      What details do I need to provide to compare public liability quotes?

      You will usually need to provide your business address, details of where you work, the services you supply, who your customers are, your annual turnover and average value of contracts, and details of any recent public liability claims that have been made against your business.

      Can public liability insurance cover legal expenses?

      Yes. public liability insurance typically covers personal injury or fatality claims, medical costs, repairs to damaged property, and legal costs.

      How do I make a claim on public liability insurance?

      Contact your insurer, providing: Your name and company details. Your insurance policy number and contact details. Details of the person or entity claiming against you. Details of the incident including the date, time and place it occurred, how it happened, details of damage, estimates of damage repairs (if possible).

      How long does a public liability insurance policy last?

      Policies typically last for one year. 

      What’s the difference between public liability and product liability insurance?

      Public liability insurance covers your business for claims for personal injury or property damage arising from the services your organisation provides. Product liability insurance protects you from injury or property damage claims caused by any faulty products that you have supplied.

      Read more: a detailed breakdown of public liabilty vs. product liability insurance.

      What should I consider when choosing a public liability insurance provider?

      Many insurers provide public liability insurance, but no two insurers are the same. Choose an insurance provider that:

      • Has a good track record
      • Provides quality cover at a reasonable price
      • Processes claims efficiently 
      • Has strong customer service with easy access for support
      • Understands your business and can efficiently measure risk
      • Provides advice on policy arrangement.

      How Swoop can help

      All business involves risk, but that doesn’t mean you have to suffer the consequences if things go wrong. Don’t let an accident become a catastrophe for your business. Contact Swoop today to compare top-quality public liability cover from different providers and to discuss all your insurance needs. 

      Written by

      Chris Godfrey

      Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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