Public liability insurance is designed to protect your business from the cost of compensation claims made by members of the public in the event of death, injury or damage to property as a result of your business activities.

Why do I need public liability insurance?

Whether you are a sole trader or a small to medium sized enterprise, you need to protect yourself against claims.

Imagine a scenario where you’re working at height and knock a spanner on to a member of the public walking under your platform, seriously injuring them. In a case like this, your business would be liable for compensation to cover distress and/or inconvenience to the injured person, their medical costs and both your own and their legal expenses. This could run into thousands or even millions of pounds in extreme cases.

Incidents don't have to be dramatic for people to claim for compensation. A member of the public tripping over a cable in your business premises, and spraining their ankle as a result, could equally claim for thousands of pounds. Even a relatively small claim could be enough to bankrupt or seriously damage the financial health of your business.

In some circumstances it is simply not possible to trade without having public liability insurance. Some employers will want to see your public liability insurance certificate before dealing with you.

Who and what does public liability insurance cover?

Policies vary between insurers, but most will cover incidents that occur on your business premises and at events or activities organised by your company.

Public liability insurance will cover anyone that you deal with as part of your business, such as customers, clients and people taking part in or watching events or activities you have organised. It does not cover employees, temporary staff, students or people on work placements – they will need to be covered using employers’ liability insurance.

Policies will usually provide cover for:

  • compensation claims for injuries or damage to property, whether that is on your premises, a customer’s premises or elsewhere
  • legal expenses
  • the cost of repairing damage you have caused
  • the cost of hospital treatment if the NHS claims against you
  • any other expenses a court decides are reasonable

Choosing the correct public liability insurance

As a Which? Trusted trader you have to have public liability insurance in place and it is important that you have the right level of insurance and a policy that covers all your requirements.

It can be tempting to buy the cheapest policy available, but you must ensure that it covers you for the minimum standards for your industry. Your policy must be sufficient to cover the complete cost of any claim you are likely to make. If you are working on a government or local authority contract, you will often find that they stipulate a minimum level of cover, which can be between £5-10 million.

It is also essential to ensure that the policy covers all areas of work that you undertake. The most basic policies may not include elements for working at height or working outside the UK for example. A good insurance broker who really understands your business should be able to recommend an appropriate policy.

Which? Trusted Traders will check that your policy is appropriate during the assessment process but if your business grows or changes and you find yourself taking on different projects, it’s worth reviewing. Insurance might be a grudge purchase but it’s not worth getting caught without it.

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