How much public liability insurance do I need?

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    Chris Godfrey

    Page written by Chris Godfrey. Last reviewed on May 26, 2024. Next review due April 6, 2025.

    The amount of public liability insurance (PL) you need depends on the industry you work in and the size of your business. In most cases, the bigger your business is, the bigger potential claims may be. (Keep in mind that a claim for personal injury or property damage will usually be increased by legal fees and claims for medical treatment and loss of income). 

    Clearly, you do not want to buy far more insurance than you need. But, 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.

    If you’re still not sure how much PL you need, base your calculations on the following:

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      The level of risk

      If your business has high exposure to members of the public, there is an increased risk of compensation claims. Think about the type of work you do and the way your business interacts with people. You should also consider the costs involved in repairing any damage caused.

      Businesses with increased exposure to the public include:

      • Builders and tradespeople
      • Landscapers
      • Shops
      • Pubs, restaurants and cafes
      • Hair, nail and beauty salons
      • Some medical and dental practices
      • Cleaners
      • Carers
      • Telecommunications and TV installers

      Industry standards

      Another way to work out how much public liability insurance you need is to find out how much PL cover other businesses in your industry take out. You could do this by calling around, or if you have one, consulting with your guild, trade body or association. Some industries will have a mandatory level of PL cover for their members, and some customers, especially local government, may set a minimum amount of public liability insurance you must have.

      Who needs public liability cover?

      Public liability insurance is a good idea for almost all businesses, (including sole traders and the self-employed). 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.

      What types of liability cover are there?

      As well as public liability cover, you may consider these other types of liability insurance:

      • Employer’s liability insurance – under the Employers Liability Act of 1969, employers’ liability insurance (EL) is a legal requirement for most UK employers. EL 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.
      • Professional indemnity insurance – also known as professional liability insurance, this 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. Professional indemnity (PI) can protect you if a client makes a financial loss because of your work and then makes claim against your business. 
      • Product liability insurance – protects businesses from financial loss in the event that someone is harmed, or property is damaged due to products that they supplied. (Even if they didn’t manufacture them).
      • Property owners’ liability – protects landlords from claims if their negligence causes someone to be injured or their personal property is damaged or lost whilst staying or visiting the landlord’s premises. 

      Finding the right level of public liability insurance

      Finding the right level of public liability insurance for your business – a Goldilocks level that’s not too high and not too low – is a matter of answering a few basic questions: How risky is your business? How much public interaction do you have? Have there been big compensation claims in your industry before? How much could you afford to lose if things go wrong?

      Additionally, you should think about the premium you can afford to pay and what level of excess you should set. A Goldilocks policy will give you sufficient cover for your expected risks at a price you think is reasonable. If you’re still unsure, talk to an expert to get a professional opinion.

      What types of claims can public liability insurance provide cover for?

      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.

      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 or error become a catastrophe for your business. Contact Swoop today to compare top-quality public liability cover from different providers and to discuss all your business 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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