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Do I need public liability insurance?

Even if your business operates to the very highest standards – things can go wrong – which can have serious consequences for members of the public and your business. That’s when taking out public liability insurance can prove to be one of the best business decisions you’ll ever make.

According to the Association of British Insurance (ABI), UK liability insurers pay out claims totaling £7.5m every day, although not all are for public liability insurance claims (employers’ liability insurance claims total £1.57m).

What is public liability insurance?

As explained by the Association of British Insurers (ABI):

“Public liability insurance covers the cost of claims made by members of the public for incidents that occur in connection with your business activities. Public liability insurance covers the cost of compensation for personal injuries, loss of or damage to property, and death.”

Unless you run a horse-riding business, you’re not required by law to have public liability insurance (you must have employers’ liability insurance if you employ staff), but having public liability insurance can provide great peace of mind. Some clients (normally in the public sector) may stipulate that you need public liability insurance before they will buy your products or services.

What does public liability insurance cover?

Most public liability insurance policies cover your business for incidents that occur on your premises or off-site, which could include events or activities your business organises. Public liability insurance can also cover you if you carry out work within a customer’s home or if they visit you at your home, if that’s where your business is based.

Note: Public liability insurance will not cover injury to you or your employees, nor damage to your/their property or possessions.

Here are some of the main things public liability insurance will cover you for…

  • employer health and safety responsibilities
    Accident and injury

    Customer slips, trips and falls that lead to serious injuries and worse.

  • Damages to possessions
    Damage to possessions

    Belonging to members of the public and any repairs required.

  • Legal costs

    Damages as well as legal expenses, which can prove costly. You may not even be guilty of wrongdoing, but still face having to defend your business in court.

  • Medical costs
    Medical costs

    Public liability policies normally cover medical expenses, too, should you be liable for these.

How much public liability cover do I need?

The cost of your premium (ie how much you pay for cover) will be determined by the nature of your business, how many people you employ and your insurance claims history.

The amount of cover that your business needs will depend on level of risk; some businesses will need far greater cover than others, because claims can range from hundreds of pounds to hundreds of thousands of pounds or more, where serious injury or death of a member of the public results. Sectors frequently have their own minimum cover for public liability insurance.

Do I need public liability insurance?

Your insurer probably won’t pay the full cost of a claim. More likely, as with other insurance policies, your business will have to pay an excess, which will be agreed when you take out your policy. It could be the first £100, £250 or £500 of any claim. Generally speaking, the higher the excess payment, the lower the premium. This is something to consider when choosing your public liability insurance policy.

Shop around for quotes and carefully compare the protection you get, as well as other important considerations, such as premiums and excess payments. Also, make sure you understand any policy exclusions.

Money is tight for most small businesses, with owners understandably reluctant to add to their overheads. But rather than asking yourself whether your business can afford public liability insurance, the question might really be – can you afford not to have it?

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