What is public liability insurance?

Public liability insurance explained

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Public liability insurance is one of the main types of business insurance.

It’s particularly important for businesses that have contact with the public, because it covers compensation claims for injury or damage made by a third party against your business.

This means that it’s a key policy for with shops, restaurants and tradespeople, although it can benefit many other business types too.

You would need to claim on your public liability insurance policy if a customer or other member of the public demands compensation from your business because they’re hurt or their property is damaged.

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For example, you run a window cleaning business and you drop a bucket from a ladder, damaging a car below. Or you’re shopkeeper and a customer is badly injured in a fall on your stairs, caused by a loose carpet tile.

In each situation, the customer could sue your business for damages, and your public liability insurance would step in to cover legal costs as well as any compensation payments.

Essential cover

Although public liability insurance isn’t a legal requirement, it’s one of the most important types of business insurance to consider.

This is because most businesses interact with the public in some way, and compensation claims can be so high that they can cripple a business that doesn’t have insurance to fall back on.

You might also find that some of your clients will require you to have a certain level of public liability insurance before they’ll agree to work with you.

This is particularly likely if you work with the public sector or local government, as their contracts often demand up to £10 million of public liability insurance.

Even if your clients don’t specify a certain level of cover, the fact that you’re covered by a good public liability policy will often work in your favour when a business is considering you as a supplier.

Public liability insurance is therefore a cover that’s worth considering for most businesses, big or small. It will protect you in the event of a claim for damages and help your business survive if it’s confronted with a costly compensation claim.

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