How Much Public Liability Insurance Do I Need?

Public liability insurance is a type of cover that can protect businesses against injury and damage claims from a third party as a result of your business activities. It can be beneficial if your business interacts regularly with the public.

It’s important to choose the appropriate amount of cover to match your business’s requirements. How much public liability insurance do you need?

Factors influencing insurance needs

When assessing how much public liability insurance you need, there are a few key factors to consider.

Business size and type

Larger businesses or those in high-risk industries may need more coverage.

Business Activities

• Processes involving the application of heat can increase the risk and level of damage caused
• Operations at height increase the risk of personal injury and damage

Level of risk

Different activities carry different levels of risk. Activities with higher accident potential, such as the construction industry, may require more insurance than low-risk ones like consulting.

Legal requirements

Some contracts or industries have minimum insurance requirements.

Location

The legal and business environment of the location can affect your insurance needs.

Industry standards and recommendations

Typical public liability insurance coverage amounts vary by industry. Public liability insurance offers cover limits starting at £1 million with higher limits of £2 million or £5 million being commonly requested. Larger businesses may require considerably higher.

The amount of insurance you’ll need depends on the individual risks associated with your business. For example, in construction, the potential risks you pose to the public are higher, meaning you’ll need more cover. Activities in the construction industry vary from bricklaying, carpentry, electrical work to civil engineering, piling, use of cranes, building bridges, roads, tunnels etc. The types of activity pose different hazards and insurance requirements.

If you work in an office with clerical duties with fewer public interactions, the risks are less than where there are manual activities, on-site, away from your own premises.

Assessing your business risks

To properly assess business risks, start by identifying potential risks in your daily operations.

Consider areas where accidents or damages could occur. This could be customer interactions, physical activities and product usage. Review past incidents and industry-specific risks.

Don’t be afraid to reach out for help from professionals like insurance brokers or legal advisors.

Consequences of underinsurance

Arranging insufficient public liability insurance limits can lead to severe repercussions. Claims exceeding coverage limits must be paid out-of-pocket. This could result in significant financial strain, legal costs and potential bankruptcy.

Insufficient public liability insurance coverage also damages a business’s reputation, eroding client trust and future opportunities. Failing to meet legal or contractual insurance requirements could also lead to penalties, legal disputes and sometimes loss of contracts.

Regularly reviewing your coverage

It’s important to regularly review and adjust your insurance coverage as your business grows. Changes in services or products, company growth and scaling operations can all alter risk, introducing the requirement for products liability.

Businesses providing consultancy advice will require professional indemnity insurance to cover the consequences of giving wrongful advice or breaching professional duties.

Regular reviews ensure your coverage remains appropriate, protecting against new or increased risks. Failing to update public liability insurance can leave gaps, exposing your business to financial loss and legal issues.

Keep in touch with insurance professionals to continually reassess and adjust your policies. This will ensure they align with your business activities and compliance requirements.

Get a public liability insurance quote

Having enough public liability insurance is important to protect your business from financial and legal risks. Regularly assess specific risks, consult professionals and adjust coverage as your business evolves.

Public liability insurance from Towergate

If you’re ready to get covered, don’t miss our public liability insurance. Get a quote today, either online or by phoning us on 0330 818 9929.

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.