What Is Public Liability Insurance?

It’s designed to protect businesses from legal action as a result of claims made by the public. This kind of insurance can cover your legal defence costs  if a third party, such as a customer or passer-by, alleges an injury or property damage  as a result of your business's activities. Where you are responsible it will pay the compensation due up to your policy limit of indemnity. Property damage will be subject to an excess, which can vary depending upon the policy type selected, typically £150-£350.

What type of businesses need public liability insurance?

Public liability insurance is beneficial for a wide range of businesses, especially those who are in contact with the public.

Product liability insurance covers the cost of compensating anyone who claims for injury, illness, disease or property damage by a faulty product that your business designs, manufactures or supplies.,

This could be ‘food and drink’ or an intrinsic ‘product’ .

Hospitality venues

Restaurants and hotels similarly host numerous visitors

Public liability can include food and drink supplied, usually restaurants and hotels should also add product liability cover.

Construction companies

Construction companies tend to operate sites where the public could be exposed to hazards. Tradespeople also benefit from public liability insurance, as they often work in clients’ homes.

Note that damage to property being worked upon is excluded, because public liability insurance is not a guarantee of workmanship. It will not pay to repair poor workmanship, but is designed to cover the consequences of poor workmanship.

For example, if a contractor fitting an expensive pane of glass breaks it whilst it is being fitted, the replacement of the glass would not be covered under public liability.

However, if the shards of glass caused injury or damage to others, then public liability can cover the legal defence costs and court awards up to the policy limit you have selected. It is the consequences of poor workmanship that is covered, not the poor workmanship itself, which is a trade risk and at the contractor’s own risk.

These are just a few examples. Essentially, any business engaging with the public regularly should consider public liability insurance. It can protect against potential claims for injuries or damages, maintaining your financial stability.

When would I need public liability insurance? 

Public liability insurance is helpful in scenarios where businesses interact with the public. In daily operations, certain types of businesses encounter situations where customers might slip, trip or otherwise get injured on the premises.

During events such as festivals or trade shows, the risk of accidents or injuries to attendees is significant. Spillages or broken glass could result in injuries to customers. This could happen at restaurants and shops, as well as pubs and clubs.

Public liability cover can also often be a requirement for tradespeople to work on building sites/developments.

Any business could potentially benefit from public liability insurance. It spans everything from photographers, carpenters and window cleaners to hairdressers, roofers and cleaners. The more hazardous and specialist the work your business covers, the more likely you will need it.

How much public liability insurance do I need?

It can be difficult to decide how much public liability cover to buy, but there are a few factors to consider that might make the decision easier.

Business size 

The bigger your business is, the more chance there is that an accident could happen

It’s the size and type of loss, and the consequences that can occur, that should guide you to the public liability cover limit you require. Decide your minimum limit by the severity of personal injury that your business could cause, form death to minor injuries.

Particularly hazardous activities include processes involving application of heat, work at height or depth. Also, work on high-value properties; or buildings with vulnerable occupants or large businesses. For example, consider the extensive financial consequences of burning down or breaking the IT connections for a large corporate organisation.

Amount of contact with the public

Businesses that regularly interact with the public could benefit from more cover.

Medical costs

When thinking about how much public liability insurance you will need, think about medical costs.

If a member of the public were to be injured as a result of your business activities, would they need medical help? How bad could their potential injury be? What is the likelihood of them needing ongoing care as a result?

If the type of claims made against you are likely to result in long-term medical care, a higher level of cover could be smart. Remember that the NHS under the NHS injury Cost recovery (ICR) scheme is able to recover costs in the event of an accident from the negligent third party.

Risk

How risky is your business? Certain industries are deemed higher risk than others. Professions like window cleaners, electricians, roofers and more. The riskier your business activities, you may want to consider opting for a higher amount of cover.

Is public liability insurance a legal requirement?

Public liability insurance is not a legal requirement in the UK. However, certain industries or contracts may mandate it. For instance, some clients or regulatory bodies might require businesses to have this insurance as a condition of doing business together.

Even when not legally required, not having public liability insurance can pose severe risks. Without sufficient coverage, businesses can be exposed to great financial risk from claims for injuries or damages.

Does public liability insurance cover claims due to employee negligence?

Yes, public liability insurance does cover accidents caused to the general public by the negligence of your direct employees’ business activities.

Does public liability insurance cover claims made by employees?

Injuries to employees themselves is not covered. Public liability insurance does not cover claims made by employees. It specifically covers claims made by third parties, such as customers or the general public.

For employee-related claims, employers need employers' liability insurance. This insurance would cover legal costs if an employee is injured or becomes ill due to their work arising from your negligence.

Both types of insurance are useful to have as a business, providing you with coverage for different kinds of risk.

Public liability insurance from Towergate

If you have a public-facing business, it’s vital to consider protection by having public liability insurance. From retail to construction and events, it can safeguard your company against accidents and the financial consequences that result.

While it’s not a legal requirement, the absence of appropriate public liability coverage can leave you financially vulnerable.

For more information see our public liability insurance webpage or call us on 0330 818 9929.

Get a public liability insurance quote

You can get a quote for public liability insurance from us quickly and easily, either online or by calling us on 0330 818 6642.

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 (AAT) and also has considerable experience as a residential landlord.