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*The Association of British Insurers (ABI) UK business insurance market statistics 2022
Public liability insurance is a type of business insurance that protects those working with members of the public. It provides financial protection to business owners facing legal action or claims made from third parties due to injuries, deaths, or property damage caused by their business activities.
This coverage is crucial for managing the costs associated with legal fees and potential compensation payments.
While public liability insurance is not legally required, unlike employer’s liability insurance, it is often deemed essential by many businesses for its role in safeguarding against unforeseen liabilities if a member of the public makes a claim against you.
Compensation claims for injuries or property damage to third parties, regardless of where it occurs
Legal expenses for any resulting legal proceedings
Cost of repairing third party property damage caused by your work
Medical fees if the NHS makes a claim against you
Accidental damage to client's property. You will need employers' liability insurance to cover any employees
Injury claims on your business premises
Personal injuries to yourself
Damage to your own property (covered by commercial buildings insurance)
Employees (covered by employers’ liability cover)
Excess amount (your own contribution to a claim)
Professional mistakes causing financial loss without physical damage (covered by professional indemnity insurance)
Intentional harm or damage by you or your employees
Public liability insurance isn't a legal requirement, but is crucial in certain business contexts, especially when dealing with government contracts or when clients request proof of coverage. It's particularly important for tradespeople, like builders, who frequently work on clients' properties.
Key business types and examples of the protection public liability insurance can offer your business:
For example, if your cleaning staff unintentionally damages property in a client's office. Public liability insurance for a cleaning business can offer protection here.
Builders: It's beneficial to have coverage in case scaffolding collapses and damages property, such as a vehicle
Plumbers: Picture a situation where someone slips and gets injured just before you manage to put up a 'wet floor' sign
Electricians: Despite adhering to safety regulations to prevent electrical hazards, unforeseen accidents can still occur
Roofer: A roofer might accidentally drop tools or materials from a height, potentially causing injury to someone below or damaging property
A customer could slip on a wet floor or trip over an obstacle within the retail space, leading to injury
Spillages or broken glass could result in a patron's injury, for which the establishment could be held liable
Hairdresser: A client could suffer a reaction to a hair treatment or slip in the salon, prompting a claim against the business
Photographer: During a photoshoot, equipment might fall and injure someone or damage property
Suppose you're catering a wedding and a guest alleges they got food poisoning from the food you provided
Cleaners: Consider the scenario where a bucket of water falls from a height onto a busy street, ruining a pedestrian's clothing and phone
Carpenters: Envision a client tripping over an unsecured cable during a visit to your workshop
The cost of a public liability policy varies based on:
Public liability claims history: Past claims may raise the cost of a policy
Business size and value: Larger businesses may face higher premiums
Nature of your business and associated risks
Excess amount: Higher excess can lower premiums
The average annual cost is £83.372 according to Simply Business data based on 50% of customers in June 2024.
The level of cover you require depends on your business needs. Consider your business risk when determining required public liability coverage. High-risk or government-related businesses may need up to £10 million, while smaller, less public-facing businesses might suffice with a minimum of £2 million. If you're unsure, speak to an insurance broker, who may be able to help you with this.
When purchasing public liability claims insurance, consider the excess—the amount you are willing to pay before the insurance covers the rest of the compensation claim. Choosing a higher excess can lower your overall cost, but ensure it's a sum you're comfortable paying if needed.
Determine your needed cover based on your business's risks. Coverage usually starts at £1 million.
In the event of an incident, notify your insurer of any claims, providing necessary documentation like photos or witness statements.
Your insurer will assess coverage and either negotiate a settlement or defend your business in court.
Employers’ liability cover is legally required if you have employees, covering legal costs for contractors or employee injuries or property damage to a third-party.
Product liability insurance covers costs if someone is injured or their property is damaged by a product you sell, even if you didn’t manufacture it.
A professional indemnity policy protects against claims arising from client advice or work, covering associated costs.
Provides income supplementation if business operations are interrupted by insurable events like fires
Protects tools from theft, damage, or loss, often added to a business insurance policy.
Business contents insurance covers equipment stored in company premises against loss, damage, or theft.
Keep up to date and find out all you need to know with our latest guides.
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If you have any contact with the public as a business owner, then public liability insurance should be a top priority. Accidents can happen, and if they result in injury or more severe consequences to a third party, the compensation claims could be financially devastating.
According to the Association of British Insurers, the average UK business insurers paid out in 2022 was £22 million per day, of which £7.6 million accounted for business liability claims*. A robust public liability insurance policy provides crucial protection if anyone tries to make a claim against your business.
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Public liability insurance isn't legally required for all UK businesses. However, it's highly recommended for those with public interactions as it provides crucial protection against injury or damage claims.
Instances where it might be needed:
Regulated Professions: Certain regulated professions may require it as part of their regulations.
Contractual Obligations: Contracts with larger entities or government bodies might stipulate its necessity.
Trade Associations: Membership in some associations may mandate it.
Though not obligatory, lacking this insurance can pose financial risks.
While not compulsory, it's essential for those interacting with the public. Self-employed individuals might find it particularly valuable due to potential full liability and lower premiums.
Cost varies based on event type, attendees, duration, location, coverage level, and special considerations. Small events may cost a few hundred pounds, larger ones substantially more. Getting a bespoke quote is advisable.
Typically, legal fees related to covered claims are included in the policy.
While not legally mandated, it protects against venue damage or accidents involving guests. Many wedding insurance policies include it.
Policies typically last 12 months with an option to renew.
It financially safeguards against claims for damage or injuries caused to others outside of business contexts.
Public liability protects against claims arising from business interactions with the public, while product liability covers issues with supplied, sold, or manufactured products.
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