Public Liability Insurance Explained: What Is It? | Do I Need It?

Public Liability Insurance Explained: What Is It? | Do I Need It?

Public Liability cover is a popular insurance policy taken out for businesses of all sizes. Most businesses should have it - but what is it? What is included?

A Public Liability policy covers your legal liability in cases where a member of the public suffers a personal injury, illness, damage to their property or even accidental death as a direct result of your business activities.

In the event of a claim, your insurance will cover both the legal fees and compensation payments up to your selected limit of indemnity. Typical indemnity limits range from £1m to £5m although we would always recommend you ensure cover is sufficient for your specific business activities.

HOW MUCH PUBLIC LIABILITY COVER DO I NEED? - Find out more here.

Bodily Injury Claims

As a business owner, you have a duty of care to members of the public to make sure your premises are safe when they visit. However, even with extensive risk management, accidents can still happen, resulting in costly compensation claims.

A common type of claim under your Public Liability insurance is an injury caused by slips, trips and falls. Tripping hazards and wet floors caused by spillage are often easy to overlook as they can appear suddenly and can't always be planned for.

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For instance, you run a coffee shop, and unbeknownst to you, a customer has spilt a drink on the tiled floor. Another customer comes along and slips on that wet floor and fractures their knee. The injured customer is self-employed and, as a result of their injury, is unable to work for several weeks.

They make a claim against you for their loss of earnings and, as you have adequate Public Liability Insurance cover, your policy responds and covers both the legal costs and the compensation payment if the claimant is successful.

Disease & Illness Claims

Public liability and products liability claims for illness usually relate to two types of incidents.

1) Illness caused by any food or refreshments you have provided for customers

2) Illness caused by environmental hazards on your property. For example, waste leakage.

Similar to bodily injury, you have a duty of care to ensure your premises are sanitary, and any food products are stored correctly. If you are found to have breached this duty of care, you will almost always be found liable for damages.

For example, you are catering for a party of over one hundred people and the hot soup container falls from a table onto four guests causing burns as well as severely injuring the leg of one attendee.

JOIN THE DEBATE - SHOULD PUBLIC LIABILITY INSURANCE BECOME COMPULSORY? - Find out more here.

Claims of Damage to Property

Property damage claims can come in for a variety of reasons. If you are visiting clients at their homes or premises and you damage their property you can be held financially liable for repairs or replacements.

For example, your business sell, deliver and install TVs. While at a customer's house installing a wall-mounted TV, one of your employees drills through a pipe. With Public Liability Accidental Damage cover, you can save your business from the cost of repairs.

Similarly, property damage can occur on your site. For instance, you run a salon, and a client comes in with an expensive designer coat. As usual, one of your employees takes the coat into the cloakroom.

However, on its journey, the coat is damaged by hair dye which strips the colour out of the fabric. Due to the unique pattern on the coat, repairs are impossible, and the client makes a claim against your business for the replacement cost of the coat. Overall, the claim exceeds £4,000 with legal fees.

5 WAYS TO SAVE ON YOUR PUBLIC LIABILITY INSURANCE WITHOUT CUTTING DOWN COVER - Find out more.

Accidental Death Claims

Depending on your industry, this risk goes from one in a million to quite possible without due care. While every precaution can be made to ensure that this doesn't happen, in the worst-case scenario, financial compensation claims can be huge.

Take our earlier example of a customer slipping and fracturing their knee when slipping on a wet floor. The same customer could have also hit their head in the same accident or, if the spillage had been near a flight of stairs, fallen a considerable height. This is why your Public Liability insurance policy will include cover for accidental death as standard.

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Employers Liability Insurance

Public liability insurance will not cover you if any of these things happen to an employee. Instead, you will need Employers Liability insurance. Employers Liability insurance is a legal requirement in the UK for any businesses that have employees, including part-time workers and volunteers.

However, there is an exception if your employees are exclusively immediate family members to the business owner.

For instance, you run a small business, and the only people that work there are you and your children, but your children are not shareholders and therefore are employees. If you have any questions about these exemptions, do not hesitate to ask our expert team when taking out cover.

While Public Liability insurance is not a legal requirement, it is often a contractual agreement that you have a minimum level of cover before starting a job.

Examples of cases where you will likely be asked for proof of PL cover include:

  • You are hiring a venue to host an event - the owner will likely require you to have PL cover before the event
  • You are going to be carrying out building or repair works - whether for a local authority or private company
  • Your commercial landlord requires it

5 MYTHS ABOUT PUBLIC LIABILITY INSURANCE - Find out more here

Products Liability Cover

Often Product Liability Insurance will come as standard with your Public Liability Insurance. It will protect you for all the same legal liabilities but exclusively concerns damages caused by products you have supplied which could cause injury or illness to a third party. This can apply to products you have manufactured, designed, sold or given away as a gift.

For example, you run an e-commerce business selling biking equipment. One of your product is faulty and causes an accident. Under your Products cover, you are covered for both legal costs and the cost of compensation.

HOW TO NAVIGATE PRODUCTS AND PUBLIC LIABILITY COVER INDEMNITY LIMITS - Find out more.

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Professional Indemnity Insurance

Finally, another type of business liability cover you should consider alongside your Public Liability Insurance is Professional Indemnity.

PI insurance is different as it is specifically for the work you carry out - for example, you provide professional advice for another business which proves to be faulty.

As an expert in your field, you are considered to have a heightened duty of care to your client, and you are liable for any financial losses that result from your faulty advice. Professionals that should consider PI cover include any sort of advisors, designers, consultants, agencies or contractors.

THE DIFFERENCE BETWEEN PROFESSIONAL INDEMNITY AND PUBLIC LIABILITY INSURANCE - Find out more here.

How much does Public Liability cover cost?

As with all insurance, the cost of cover will depend entirely on your activities. Factors that will influence your premium include your claims history, level of risk involved and the size of your operation.

Insync can compare Public Liability Insurance from a panel of leading insurers to make sure you're getting the right level of cover for the right price.

Contact us today to get your business insurance quote.

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