Do I need 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.

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.

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?