Public Liability vs Employers Liability: What's the Difference?

Distinguishing between public liability and employers liability is important for business owners to ensure protection against lawsuits and potentially crippling financial loss.

What is public liability insurance?

Public liability insurance covers claims made by third parties for accidental injuries or damage to property, that happen as a result of business activities that are deemed to be your fault. It can protect businesses against financial losses from such allegations and claims.

Typical scenarios include a customer slipping and getting injured in a store and breaking their property. Public liability insurance could cover the resulting claims. This insurance ensures businesses can handle unforeseen incidents without severe financial consequences.

What is employer’s liability insurance?

Employer’s liability insurance protects businesses against claims from employees that they make for injury or illness due to their work. It is a legal requirement covering the legal costs to defend an allegation. Where you are at fault the policy will pay the compensation awards up to the maximum limit of your cover, normally up to £10m. Higher limits are available.  

Common instances where employer’s liability insurance can help include an employee injuring themselves on poorly protected work equipment or suffering from work-related stress. This kind of insurance protects employees and allows businesses to meet their legal obligations without the threat of financial loss.

Key differences between public liability and employer’s liability

Public liability insurance deals with claims from non-employees, such as customers or visitors. Employer’s liability insurance covers claims from employees.

Employer’s liability insurance is legally required by employers in the UK, giving cover for employees who suffer work-related injuries or illnesses. Businesses are protected by legal defence costs for such allegations, and insurance pays compensation where the business is found to be at fault. Public liability insurance is generally optional but highly recommended to reduce the effect of similar allegations of accidental injury to third parties or damage to their property.

Why both public liability and employer’s liability insurance matter

Having both public liability and employer’s liability insurance gives you a strong risk management strategy.

Public liability insurance covers third-party claims, while employer’s liability insurance can help with employee-related incidents. Together they ensure substantial protection against unforeseen events.

Without adequate insurance, businesses can face severe consequences including legal penalties for not having compulsory employer’s liability insurance. Sometimes it can even lead to bankruptcy from paying out claims for injuries or damages.

Choosing the right insurance for your business

When you’re choosing the right business insurance for you, assess your need for each type of insurance. Evaluate your business operations, the types of properties and locations worked at. Your processes, and whether any of these are potentially hazardous such as work at height or involving the application of heat. Consider the number of employees, as well as the individual risks you face.

Companies with direct customer interaction or hazardous environments would benefit from public liability insurance with higher limits of indemnity. Ask your insurance broker for guidance on suitable public and employer’s liability coverage.

Things to consider when choosing insurance

• Compare policy exclusions to ensure the right coverage
• Check coverage limits to confirm they meet your needs
• Evaluate premiums for affordability without compromising protection
• Research the provider’s reputation and customer service
• Look for policies tailored to your specific industry risks

Get the right cover

Public liability insurance covers claims from non-employees for accidental injuries or damages related to business activities. Employer’s liability insurance covers employee-related accidents.

Employer’s liability insurance is compulsory in the UK. Public liability insurance is optional, but highly recommended to guard against third-party claims.

Both insurances can prove useful to shield your business from financial and reputational losses. They can reduce the risk caused by legal claims.

Get a public liability insurance quote

If you’re ready to get covered, we offer public liability insurance. You can get a quote online or by phone on 0330 818 9929.

Get an employer’s liability insurance quote

We also have employer’s liability insurance policies. Get a quote online or give us a call on 0333 060 1270.

About the author

Alison Wild BCom (Hons), FMAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has 20 years' experience as a residential landlord.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.