5 Myths about Public Liability Insurance
MYTH 1: It is Compulsory to buy cover
Not true, there is no legal requirement for your business to purchase Public Liability cover. However, in reality if you or your employees are working with the public or on customer premises PL Insurance almost becomes a “must have” or you will be leaving yourself open to a significant claim should you or your employee injure someone or damage property in the course of your job.
Even if you work alone from home you may still find that customers or members of the Public are visiting you for meetings and it would be advisable to arrange cover should they trip or fall and look to you to compensate their injury.
The myth has probably surfaced due to the fact that it is often purchased as part of a package with Employers Liability. Under the Employers’ Liability (Compulsory Insurance) Act 1969 any firm deemed to have employers must purchase Employers Liability Insurance to protect the duty of care it owes to its employees.
MYTH 2: Cover is only for Builders, Contractors or manual trades
This is a really worrying myth, yes, a manual occupation will obviously have more exposure being self-employed to liability losses, but we have seen some equally large claims falling onto so-called professional or non-manual trades, all-be-it not with the same frequency.
- Think of the IT Contractor working in an office, the sandwich lady trips over your laptop bag and breaks her arm and cannot work for a month and believes you were responsible. Slips and trips can generate a significant number of claims, whether it’s falling on ice in your office car park, or a wet shop or café floor, volumes are rising in today’s litigious society and it’s vital you have the correct level of Insurance in place.
MYTH 3: PL Insurance covers financial loss
An easy assumption to make perhaps, but this is only partly true. A standard policy will not normally offer protection against claims for pure financial loss, but will extend cover a financial loss as a result of damage or injury.
- An electrician is working on fuse board wiring in an office and he tells the owners that the power will be down for 10 minutes, however the job takes longer than expected and it is 3 hours later before power is restored. The business claims it has lost £50,000 in revenue and is looking to the Electrician for reimbursement – this would not be covered under a Public Liability policy as no injury or damage has occurred.
Some Liability Insurance policies can be extended to cover pure financial loss and where you are providing specialist advice or services you should also consider Professional Indemnity Insurance.
MYTH 4: Cover is provided for professional advice or services
It’s all too easy to confuse Liability and Professional Indemnity Insurance. PI cover provides indemnity against claims for Professional negligence resultant from your business advice or services, Public Liability, on the other hand, covers unintentional injury or damage. This difference may seem subtle, but it could be fatal if you have not protected your business correctly.
Let’s look at another example and a couple of different potential claims scenarios to make things a little easier to understand:
- You run a kitchen business providing full service from design to installation. Your fitter drills through a water pipe putting up a cabinet and an heating engineer is required to replace the pipe, drain and reset the system resulting in a claim for c£1,000.
- In the second scenario, you fit a new kitchen, the receive a call from the customer, following a routine service of his boiler he has been told that the new kitchen cabinets are too close to the unit and need to be removed. The customer claims that the whole kitchen needs to be redesigned and replaced – as you designed the kitchen, he is looking for you to rectify or compensate for his loss. This claim could be significant, but as it is a result of the design it would fall under Professional Indemnity Insurance.
MYTH 5: Liability Cover is expensive!
Although some claims can run into hundreds of thousands of pounds, or more for serious injury losses, fortunately these are few and far between. The basis of insurance is the law of large numbers and the sheer volume of businesses buying cover make it affordable to individuals and companies of all shapes and sizes.
Whilst the specific cost of your Insurance depends on the potential exposure to claim, a cheap Public Liability Insurance policy for a self-employed tradesman can start from under £75 per year for £1,000,000 Indemnity, which is great value for the peace of mind and protection of your business.
FREE Business Insurance review
At Insync you can compare public liability insurance online, or will provide a free review of your business and all your insurance requirements. Call 0330 124 0730 or book a slot via www.insyncinsurance.co.uk at a time that suits YOUR diary.
About the Author
I’m passionate about family, sport, technology and business.
In fact, I have always been fascinated by business, whether it was running the school tuck-shop or my Saturday job in the local store, I was always looking for ways to improve or view things differently.
I have enjoyed an amazing career fast approaching 25 years in the insurance industry, which has given me real insight into the challenges and opportunities faced by SME businesses in today’s ever-evolving marketplace.
I co-founded Insync Insurance, to offer companies a new way to buy and manage their business insurance. A synergy of digital servicing and personal expertise - utilising the latest technology to enhance relationships, not to replace them.