Public Liability Insurance

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If you’re a small business owner or sole trader that comes into contact with members of the public during the course of business there is a risk that you might be hit with a public liability claim at some point if someone is injured and you are held liable.

But it’s not just claims for physical injuries that this type of policy can protect you against – if a member of the public sues you because their property or belongings were damaged or destroyed this type of insurance can cover the resulting legal expenses and compensation pay-outs in those cases too.

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How much does public liability insurance cost?

Some SMEs and sole traders have a higher risk of public liability claims than others, so the exact nature of your business will have a significant impact on the cost of your insurance.

A range of other variables will also be used to calculate your premium, many of which are specific to you (your location, the amount you’d like to be covered for, whether or not you’ve claimed on a public liability insurance policy in the past) so it’s difficult to provide any sort of meaningful figure without comparing real quotes.

It’s also worth bearing in mind that there are a wide range of add-ons that can be bundled with your core PLI policy, and those can have a significant impact on your insurance premium too.

Is public liability insurance a legal requirement?

No, small businesses and sole traders are under no legal obligation to take out public liability insurance, and that holds true no matter what your business does.

However, if a member of the public was ever injured and you were held liable you would have to pay the resulting compensation pay-outs and legal fees yourself unless you had a PLI policy in place at the time of the incident, so this type of insurance usually is a wise investment.

Does public liability cover me if one of my employees accidentally injures a member of the public?

Yes, if one of your own employees accidentally injures a customer, a visitor, a delivery person or a salesperson your insurance should cover you if the incident results in a liability claim.

However, it’s worth bearing in mind that if your own employee is injured, that wouldn’t be covered by your public liability insurance policy – you’d have to rely on your employer’s liability insurance for that instead.

Does the accident have to happen on my own premises in order for it to be covered?

No, not necessarily.

If you’re insuring a retail, catering or hospitality business then any accidents that happen at your shop, restaurant, cafe or hotel should obviously be covered. However, if your business provides a delivery service, runs events at other venues or visits customers at their location then you could just as easily face a liability claim if something happens at one of those locations, but fortunately, your public liability insurance will usually cover you in those cases as well.

What other types of add-ons can I bundle with a public liability insurance policy?

There are a number of different add-ons you can bundle with your liability insurance, but some of the most popular ones include:

• Employers’ liability insurance: If your small business employs staff you have a legal obligation to take out employers’ liability insurance, even if those employees only work for you on a part time basis.
• Product liability insurance: If your small business sells physical products and a fault with one of those products leads to a member of the public being injured in some way this type of insurance could cover the resulting legal fees and compensation claims.
• Directors and officers insurance: This type of add-on is specifically intended to protect the business’s senior management against the risk of liability claims, which could arise if it was argued that the business was mismanaged in some way and that in turn resulted in losses for third parties.