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Public liability insurance for small business

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Last editedMay 20202 min read

Although it could be an incredibly important tool to have in your back pocket, many business owners don’t bother to get acquainted with public liability insurance. That’s a mistake, as public liability insurance could keep you covered against claims and legal fees if people get injured or property is damaged as a result of your business activities. Find out everything you need to know about public liability insurance in the UK with our simple guide. First off, what is public liability insurance?

What is public liability insurance?

Public liability insurance can protect your business against any claims or legal costs from a person – whether a client, supplier, or member of the public – who suffers some form of injury or damage to their property stemming from your work. If your business gets sued, a public liability insurance policy will cover your legal fees, as well as any potential compensation or settlement that you’re ordered to pay.

What does public liability insurance cover?

Public liability insurance covers a broad range of situations. In the most general sense, it covers your business if anyone is injured in any way by your work, or if you damage third-party property through your business activities. Different public liability insurance plans will cover different activities, so before you take out a plan it’s best to check that any relevant activities for your business aren’t excluded.

So, what doesn’t public liability insurance cover? In short, it won’t cover injuries to your employees or to yourself, and it won’t keep you protected if an employee decides to sue. That’s what employer’s liability insurance is for, which is why it may make sense to take out both forms of insurance (employer’s liability insurance is mandatory if your business employees more than one person).  

Does my business need public liability insurance?

Although public liability insurance in the UK isn’t legally required – unlike employer’s liability insurance – it’s important for any business that deals with the public to take out a policy. If a customer has an accident on your business premises and they decide to sue, public liability insurance can keep you from having to foot the bill. Generally speaking, it’s a good idea to get public liability insurance if any of the following statements apply to your business:

  • You work from home and clients come to visit

  • Members of the public frequently visit your business’s offices

  • Your business hosts or organises events/activities

  • You work in public areas where people have easy access

So, while it’s an extra cost – which can be particularly difficult to deal with when you’re starting a business – public liability insurance is still worth the expense.

What happens if I don’t have public liability insurance?

Simply put, you could face potentially disastrous financial consequences. Without public liability insurance, you’ll have to handle the legal fees and financial settlement (if it comes to that) out of pocket. This could have a significant effect on your business’s cash flow, leading to a range of possible outcomes, including bankruptcy. It’s important to remember that even the smallest issue, such as a scratch to someone’s personal property, could lead to significant legal fees and fines, so seeking coverage is always likely to be a good idea.

What is the public liability insurance cost?

Public liability insurance costs depend on the insurance provider you pick, your history of claims, and the nature of your business. For example, if your business involves a greater level of risk, you may need to pay a greater public liability insurance cost. Having said that, a high-risk business is more likely to need the coverage.

Where do I get public liability insurance?

You can get public liability insurance in the UK from most major insurance providers. It’s important to shop around until you find a plan that’s best suited to your business. Think about the level of coverage (maximum amount that the provider is willing to pay out), business activities covered by the plan, and whether your provider offers compensation for lost work. It’s also worth considering your contractual requirements, as some of your clients may stipulate a certain level of coverage.

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