What Is Public Liability Insurance?

The information provided in this article is for editorial purposes only and not intended as financial advice. SwitchPal is an Introducer Appointed Representative (IAR) of Seopa Ltd. (FRN: 313860)

Public liability insurance is one of the most important forms of business insurance there is. It covers businesses of all sizes, across a variety of industries, against legal claims made by a client or member of the public against you because they have been injured, or their property damaged, as a result of your business activities. The costs of such claims can be ruinously high for any size of business, and you need to make sure that you’re covered against all eventualities.  

Understanding Public Liability Insurance

In most cases, public liability insurance is not a requirement by law, but many clients will insist that you're covered for it before allowing you to begin work. Some trade associations will not allow you to register with them unless you have a valid liability policy, while lenders may not offer mortgages to landlords who do not hold them. 

Who Needs Public Liability Insurance?

If you own or rent a commercial property that’s open to the public, such as a café, shop or salon, public liability insurance is a must. The same goes if you run an office, even from home, and welcome clients or couriers in regularly, or if you’re someone whose work brings you into contact with the general public. 

Wherever you go, public liability travels with you. If you’re out and about visiting clients, you’ll still be accountable for any damage that you cause. Builders and tradespeople, for example, should always have comprehensive public liability insurance. If you subcontract work from contractors or work with local authorities, always check what level of public liability insurance they expect you to have. 

What Does Public Liability Insurance Cover?

Public liability insurance covers the cost of legal fees incurred or payouts resulting from a claim in which a business owner is found liable. Because these costs can be extremely high, the level of coverage usually starts in the millions of pounds. 

There are as many scenarios in which a claim against you could be made as there are businesses, but some more common ones may include slips and trips in the office, food poisoning or scalding in a cafe or restaurant, or accidents on building sites involving machinery or building materials. 

Costs and Factors Affecting Premiums

The cost of your premium will be decided by several different factors. Some of the most common include: 

Occupation

Different occupations have different levels of risk. So, depending on what job you have, your price is going to be different. Tradespeople, professionals, and retailers all operate differently, which changes their risk profile. Greater risk exposure means you’re more likely to claim, so insurance companies are likely to raise the price of your policy to compensate for more frequent policy payouts.

For example, a tradesperson poses a higher risk for several reasons, such as increased exposure to the public, working from heights, digging up the ground, or working with dangerous tools that could lead to injury if misused. A consultant, however, poses less risk as most of their time is spent working from home or the office with little exposure to risk.

Work Location

Different areas of the country may warrant a difference in cost. As well the area in which your business is located, where you carry out your work also factors into the price. If your business is on a large scale with multiple locations, then you may pay a higher premium. If you work from home or a single office, your likelihood for risk is lower than those who work from a large multi-office building, shop, or those who visit their clients.

Level of Cover

Cover levels start at £1 million and can go above £5 million, so the level you choose will have an impact on your price. The more coverage you have, the higher your premium will be.

Number of Staff Members

The more staff you have, the more interactions you’ll be having with the public, which means you’ll be taking on a higher level of risk and an increased risk of public liability claims resulting from negligence or accidental injury.

Annual Turnover

A higher annual turnover suggests that you work with a large volume of clients, expensive contracts, or a combination of both. This means your risk factor for an insurer is higher. Turnover normally only affects the price of premiums for retail businesses.

Level of Excess

As with most insurance policies, the excess you choose to pay affects your premium because you’re taking on more of the potential claims cost upfront. A larger level of excess will result in a smaller premium.

How to Get Public Liability Insurance

SwitchPal can help you through this often confusing process! We offer access to a panel of trusted providers which can help to get you the best value coverage at the most competitive price. But to do this, you’ll need to provide certain bits of basic information:

• Information about your business: You’ll need to provide information about the kind of business you run, where you're based, how long you've been in business and how many staff you have.

• Make sure that the policy is suited to your needs: Check to see if the cover levels fit your needs and what the exclusions are, if any. You might also want to consider other cover such as employers’ liability or professional indemnity.

• Select a quote from the specialist providers: Making sure you have value for money rather than just the cheapest price is essential – as not all policies offer the same levels of cover or service.

How Do I Claim on My Public Liability Insurance?

The first thing you should do is act quickly to minimise any damage or injury. That may mean making sure the injured person receives medical attention, or ensuring no further damage is done. At this stage, you should not admit blame. If a claim is brought, there will have to be a proper investigation to establish what happened and who was responsible. Even if it looks straightforward, there may be circumstances you are not aware of.  

What records do I need to make?

It’s important to make a record of what happened, including what happened during the incident, the time and date, and the names and contact details of everyone present at the time. You should consider taking photographs and obtaining statements from any witnesses. 

When do I contact my insurers?

You should contact your insurers as soon as possible, even if the person injured hasn’t claimed you yet. Your insurers will be able to confirm whether your public liability insurance covers the incident. Normally, they will explain what you need to do next or what will happen. 

What information will my insurers need? 

Your insurance company will need your name and company details, your insurance policy number and contact details, details of the person claiming against you, details of the incident including the date, time and place it occurred, how it happened, details of any damage and, if available, estimates of damage repairs. In personal injury cases, they will need details of the injury and other information you can supply about treatment, time off work etc, but don’t worry if you don’t have all this information.

What happens once I’ve registered a claim?

Provided you are insured with a reputable insurer, they will advise you on what to do next, and keep you informed about the progress of the claim. They will need to establish the facts and who was to blame so that they can resolve the claim as quickly as possible.

There is no question that the costs of not having public liability insurance can be extremely high indeed, and it always makes sense to be prepared for the worst. But having the appropriate level of coverage for how you do business doesn’t only protect you. it will also ensure that the public is protected from the consequences of mistakes that happen every day. It’s insurance that you can’t afford to be without!