How Much is Public Liability Insurance?

Is public liability insurance worth the investment?

As a business owner, there are many types of commercial insurance available to protect you in case something goes wrong. But if you’re specifically looking for something to cover you if a customer or member of the public suffers a loss or injury at your business, it’s public liability insurance you’re after. If you’re asking yourself, “How much is public liability insurance?” and “Is it worth it?” we’re here to help.

Let’s take a closer look at how much you’ll need to invest.

What is public liability insurance?

Public liability insurance is a type of commercial insurance that protects you against claims for injury or damages to property that are a result of your business activities. It specifically covers claims that are made by customers or members of the public. 

If any of these claims result in legal proceedings, your public liability insurance will cover compensation payouts and legal fees. 

Public liability insurance isn’t only for businesses with physical property, like a store or a hotel, but also for people who offer services, like mechanics, window cleaners, gardeners, and so on. 

How much does public liability insurance cost?

As with any type of insurance, how much you pay for public liability insurance depends on different factors, including the type of business you run, its location, and how much cover you choose. Insurers also usually charge a premium if they consider your company “risker”. 

Cover options usually range from £1 million to £10 million, with £1 million, £2 million, and £5 million being popular options.

When an insurer is deciding what you’ll pay, they’ll consider factors like:

  • The number of employees your business has
  • Your turnover rate (since higher turnover usually mean you have more clients)
  • How frequently you use dangerous tools in your work
  • If your business operates in an area with heavy footfall
  • The payment plan you choose, such as monthly instalments or annual payments 

Because how much businesses pay for public liability covers varies, it’s best to contact a broker like A-Plan to find the best deal — both in terms of coverage and cost.

Your broker will ask you a series of questions to better understand how much protection is right for you, and they’ll proceed to get back to you with tailored quotes from different insurers. Brokers also help you avoid paying for unnecessary add-ons.

The cost of not getting public liability insurance 

Since businesses in the UK aren’t legally required to get public liability insurance, you might choose not to invest in it. But that means that you’ll have to pay compensation and legal fees out of your own pocket if you’re sued by a member of the public. 

In general, public liability insurance policies cover: 

  • Injury: This will come into play if a member of the public is accidentally injured as a result of your business activities, or on your business property.
  • Property damage: This means you’re covered if you cause accidental damage to another person’s property. One of your at-height construction workers could drop a hammer on a car below, for example.
  • Legal fees, expenses, and compensation: In case you’re taken to court by a member of the public.
  • Product liability: This means you’ll be covered if a product you make causes illness or injury, or damages someone’s property.

If you don’t have public liability insurance, you’ll end up paying for these costs yourself. If the accident is serious, stomaching the fees could threaten the viability of your business.

Also, while public liability insurance isn’t a legal requirement, it’s worth bearing in mind that some organisations, trading authorities, and customers might require your business to have a certain level of public liability cover in place. They’ll usually ask you for a public liability certificate to help them understand the details of your policy. 

Are my employees covered by public liability insurance?

No, public liability insurance only covers you against claims made by third parties. It doesn’t include claims made by you or your employees, including temporary staff, borrowed workers, or volunteers. 

To cover your employees, you need to take out a separate commercial insurance policy, called employer’s liability insurance. This type of insurance is required by law in the UK if you employ one or more people.

Employer’s liability insurance covers you for compensation claims made by your employees for illness, injury, or property damage they’ve experienced as a result of the work they do for you.

How much public liability insurance do I need?

Technically, how much public liability cover you get is up to you, and will usually depend on:

  • The size of your business. If you run a national chain with dozens of branches across the country, you’ll typically need more cover than a small business with five employees and one outlet.
  • How much contact your business has with the public. If you have more interaction with members of the public, you’ll typically want more coverage. A public-facing establishment like a restaurant, for example, will likely need better protection than a call centre that primarily interacts with people over the phone.
  • Trade bodies and associations. Some industries have more regulations, and they might have associated trade bodies that require you to have a certain level of coverage. Make sure you account for regulations by any trade bodies in your industry.
  • Client contract details. If you work with other businesses, they may require their contractors to have a minimum level of public liability coverage.
  • Claims frequency. If your business has a history of making more claims than similar companies in your industry over the same time period, then you might need to pay a premium. 

In summary

Although public liability insurance isn’t a legal requirement for businesses in the UK, many choose to invest in it to protect themselves if an incident takes place. If your business activities, tools, or property harms a customer or a member of the public, public liability cover will take care of the legal fees and any compensation. 

How much public liability insurance will cost you depends on different factors, like the industry your business is in, your employee headcount, and whether your organisation is public-facing or not. The amount of cover you need also depends on various factors, like the size of your business and the regulatory requirements of trade bodies and associations in your industry. Insurers typically offer cover options ranging from £1 million to £10 million.

If you’re considering investing in public liability insurance, it’s best to contact a broker to get the best quotes and make sure you have enough protection for your needs. Give yourself peace of mind that, if the worst happens, your business is covered. 

Frequently asked questions

Got some more questions about public liability insurance in the UK? We’ve answered some of the most common questions below.

1. What is the minimum public liability insurance in the UK?

Since public liability insurance isn’t legally required in the UK, there isn’t a legal limit. However, most insurers start their coverage plans from £1 million.

2. How much is liability insurance for a small business in the UK?

Public liability coverage in the UK typically ranges from £1 million to £10 million, and small businesses in the UK may typically pay for around £2 million worth of coverage. But how much coverage you need depends on factors like your business’s size and how risky your industry is. 

3. Do you have to pay for public liability?

You don’t have any legal obligation to pay for public liability insurance. However, in some industries, trade bodies and associations may require you to pay for a certain level of coverage. 

4. Why is my public liability so expensive?

Different factors influence how much you need to pay for public liability insurance. For example, if your business is public-facing or involves using dangerous tools, you may need to pay more. Or, if you have a history of making frequent insurance claims, your insurer might add on a premium.

5. Is public liability insurance tax deductible?

Yes, it is. HMRC classes insurance (which includes public liability insurance) as an allowable expense, reducing the amount of tax you need to pay. So when you’re doing your tax return, you can deduct the cost of your public liability insurance from your gross income, just like you would any other kind of insurance. 

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