Public Liability Insurance: A Small Business Guide for the UK

I was reading some posts on a Facebook group that I belong to when the subject of needing Public Liability Insurance came up and a discussion followed about the subject with many people asking what it was, so I thought I’d write this article.

As with any article on here, it does not constitute financial advice and you should always talk to your professional adviser such as your insurance broker.

What is Public Liability Insurance?

Public liability insurance is an important type of cover for small businesses in the UK. It protects businesses from legal costs and compensation claims if a member of the public is injured or their property is damaged due to the business’s activities. If your business interacts with customers, suppliers, or the general public, this insurance can help protect you from unexpected financial losses.

Why Do Small Businesses Need Public Liability Insurance?

Running a small business involves risks, especially when dealing with the public. Even if you take great care, accidents can happen. Public liability insurance provides peace of mind by covering the cost of claims that could otherwise be financially devastating.

Some common examples where this insurance may be needed include:

• A customer slips on a wet floor in your shop and injures themselves.
• You accidentally damage a client’s property while working at their premises.
• A passerby trips over equipment left outside your workplace and suffers an injury.
• A member of the public slips on a dust sheet you are using at their home – while this may sound unlikely it happened to my mother who broke her ankle on a sheet being used by a double glazing installer in her home.

Without public liability insurance, you would have to cover legal fees and compensation costs yourself, which could be costly.

Is Public Liability Insurance a Legal Requirement?

In the UK, public liability insurance is not a legal requirement for most businesses. However, some businesses may need it to operate legally. For example, contractors working for local councils or large organisations may be required to have it as part of their contracts.

Even if it is not legally required, many clients, landlords, and event organisers may insist that you have it before working with you. This means that having public liability insurance can help secure contracts and build trust with customers.

What Does Public Liability Insurance Cover?

Public liability insurance typically covers:

• Injury to third parties – If a customer, supplier, or member of the public is injured due to your business activities.
• Damage to third-party property – If your business accidentally causes damage to someone else’s belongings.
• Legal fees – If a claim is made against you, your policy can cover the cost of legal defence.
• Compensation claims – If a claim is successful, the policy will cover the cost of compensation payments.

What is Not Covered by Public Liability Insurance?

While public liability insurance provides valuable protection, there are some things it does not cover, including:

• Injuries to employees – You will need employer’s liability insurance for this.
• Damage to your own property – You may need separate business contents insurance.
• Professional mistakes – This is covered under professional indemnity insurance.
• Deliberate acts – If an incident occurs due to intentional harm, your insurance will not cover it.

How Much Cover Do You Need?

The amount of cover you need depends on your business activities and potential risks. Most policies offer cover ranging from £1 million to £10 million. Factors to consider include:

• The nature of your business – High-risk industries, such as construction, may require higher cover.
• The size of your business – The more people you interact with, the greater the risk.
• Contract requirements – Some clients may specify a minimum level of cover.

How Much Does Public Liability Insurance Cost?

The cost of public liability insurance varies depending on several factors, including:

• The type of business you run.
• The level of cover you choose.
• Your claims history.
• The number of employees.

For small businesses, public liability insurance can start from as little as £50 per year, but high-risk businesses may pay significantly more.  Your broker would be able to provide you with quotes for the right amount of cover.

How to Choose the Right Policy

When choosing a policy, consider the following:

• Compare quotes – Use comparison websites to find the best deal or talk to an insurance broker.
• Check exclusions – Ensure you understand what is and isn’t covered.
• Read customer reviews – Look at feedback from other business owners.
• Assess the insurer’s reputation – Choose a well-established provider.

How to Make a Claim

If an incident occurs, follow these steps:

1. Gather evidence – Take photos and collect witness statements.
2. Report the incident – Inform your insurer as soon as possible.
3. Provide necessary documents – Your insurer may require forms, receipts, and other evidence.
4. Cooperate with the investigation – Your insurer will assess the claim before making a decision.

Final Thoughts

Public liability insurance is an essential safeguard for small businesses in the UK. While it may not be a legal requirement, it can protect your business from significant financial losses and help you win clients. By understanding what it covers and how to choose the right policy, you can ensure that your business is well protected.