What is public liability insurance?

Public liability insurance explained

There are so many types of insurance available for all sorts of different reasons and purposes, it can sometimes be a little overwhelming to know which one does what.

Public liability insurance, sometimes also referred to as business liability insurance, is a type of insurance policy that many businesses choose to take out in order to cover them for legal reasons.

In our guide below, we’ll take you through the definition of public liability insurance, who needs it, plus the typical liability insurance cost and what it can cover your business for.

Public liability insurance meaning

This is a type of insurance that’s designed specifically with business owners in mind. It offers protection for you and your business if you’re taken to court or sued by a client, customer or member of the public.

Public liability insurance provides you with legal protection and covers the cost of your legal defence, as well as any compensation or settlement payments you may have to pay as a result of the legal issue.

How much is liability insurance?

The cost of liability insurance depends on numerous factors such as how much cover you want to take out, how big your business is and how much it’s worth.

Public liability insurance can cost as little as £40 a year for small businesses, to hundreds of pounds a year for bigger enterprises; it just depends on the size of your business and the level of cover you want to take out.

What does public liability insurance cover?

Public liability insurance covers the cost of legal action and any compensation claims that are made against your business in the event that someone (such as a customer or member of the public) is injured on your business premises, or if their property suffers from damage.

It also covers you if any injuries or damage arise as a result of you working in a third party’s home or office.

The cost of medical treatment and any associated transport costs (such as an ambulance having to take someone to the hospital) are also covered under public liability insurance if the NHS decides to make a claim against your business as a result of having to treat someone due to an accident at your business.

What does it not cover?

Unfortunately, there are some things that public liability insurance does not cover, such as any injuries or damage to you or your employees.

It also doesn’t cover you if one of your own employees decides to make a claim against you; this will be covered under employer’s liability insurance which you are required to have by law if your business employs more than one individual.

Public liability insurance also doesn’t cover all costs; just like with most types of policies, you will have to pay an excess fee when a claim is made. 

Do I need public liability insurance?

If you’re wondering whether you can get in trouble if you don't have public liability insurance and is it a legal requirement, then you’ll be pleased to know that it isn’t technically a legal requirement so you don’t have to have it in order to operate your business legally.

However, it is something that’s worth considering taking out as a business as it will help to protect you in the event that your company is taken to court or sued by a member of the public or a disgruntled customer. Unexpected costs such as legal fees and compensation claims can be detrimental to the financial situation of a business, so if you want to avoid these kinds of costs, it’s worth taking out public liability insurance.

While it’s not legally required, you will probably want to consider taking out public liability insurance if you operate in one of the following trades in order to help protect your business against any claims that could cost your business thousands of pounds in legal fees and compensation fees:

  • Pubs/bars
  • Carpenters
  • Builders
  • Electricians
  • Gardeners 
  • Plumbers
  • Taxi drivers
  • Painter/decorator 

Do I need to have public liability insurance if I'm a self-employed worker?

If you’re self-employed, liability insurance isn’t a legal requirement but similarly to regular business liability insurance, it might be worth getting a policy to cover you against unexpected legal costs and actions taken against your business as someone who’s self-employed.

While you might not want to have to pay for this kind of insurance, it will certainly be cheaper than forking out for the cost of paying for damages that occur at your business or at a third party’s home or office.

3rd party liability insurance

Third party insurance is a type of public liability insurance that is purchased by the insured (first party) from an insurer (second party) to cover the costs of claims made from clients, customers or members of the public (third party)

There are two main types of third party liability insurance - bodily injury coverage and property damage coverage.

Injury coverage protects against claims that result from injuries to an individual and will cover the costs associated with hospital care, transport costs and any lost wages as a result of the third party being unable to work due to their injuries.

Property damage covers the cost of damages to a third party’s property such as structural damage or replacement landscaping.

Where to get the best liability insurance

In order to find the best public liability insurance for you and your business, it’s a good idea to compare quotes from various providers in order to ensure that you get the best deal.

There are dozens of liability insurance providers in the UK, so it can be hard to know which one to choose. Take a look at the list below of some of the best providers of public liability insurance and make sure you carry out the proper research required in order to see which one is right for you and your business.

  • AXA Business Insurance
  • Bionic Business Insurance
  • Premierline Business Insurance
  • Superscript Business Insurance
  • Hiscox Business Insurance

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