What is Public Liability Insurance? (Full Guide)

What you need to know about going public.

If you’re on a quest to protect your business, the question of “What is public liability insurance?” has likely come up.

In short, this type of coverage protects against legal claims made against you. But do you need this type of insurance? Is it mandatory? And what does it cost?

We’ll take you through the details.

Public liability insurance: A definition

Public liability insurance is a type of insurance coverage designed to protect your business if a legal claim is made against you by a member of the public

Public liability insurance typically covers claims made against you or your organisation for:

  • Personal injury
  • Loss of property
  • Damage to property

You could be liable if someone injures themselves on your property or at an event you have planned. Likewise, if your business activities have resulted in someone else’s property being damaged or destroyed, you could have a claim made against you.

The reality is that accidents happen, but they don’t have to bring financial ruin to your business. Public liability insurance means you don’t have to live in fear of being met with unforeseen bills you cannot pay. 

Is it illegal to work without public liability insurance?

Under UK law, you can legally operate a business without public liability insurance.

The only insurance type businesses you must have by law is employers’ liability insurance. (That’s if you have any employees, of course!) This type of coverage protects you against legal claims made by employees for work-related injury or illness. 

As for public liability insurance, while it’s not mandatory, you may want to think twice about not getting it. 

Public liability helps to protect:

  • Your finances if a claim is made against you
  • Your clients and any member of the public that engages with your business
  • Your reputation — it shows that you have done your due diligence to keep the public (and their property) safe

Clients, suppliers, and specific regulatory bodies may also insist you have public liability insurance before they start working with you. You can get a public liability insurance certificate that outlines the details of your coverage. This will serve as proof of coverage for anyone who needs to know what protection you have in place.

What does public liability insurance cover?

Your specific policy will outline what you are covered for depending on your business type. 

If your company’s operations take you inside other people’s homes, for example, you’ll want to ensure that you’re covered if anything happens to their property while you’re working. Alternatively, if you regularly organise events, your coverage must extend to protecting you from injury claims made by attendees. 

With your insurer, you will decide on the details of your protection.

Most public liability insurance policies will cover compensation payments and legal costs related to claims made against you by a:

  • Visitor to your business premises
  • Participant in an event or activity that you have organised
  • Spectator at an event or activity that you have organised
  • Client 
  • Contractor
  • Customer

Note: Public liability insurance is not intended to cover your employees — employers’ liability insurance will do that.

(Pro tip: You can get public & employers’ liability insurance in one package from Howden if you’d like to go that route.)

Read more: What is Employers’ Liability Insurance?

Examples of public liability claims

There are some potential scenarios where you’ll be thankful you had that public liability coverage in place:

  • Your client visits your offices and falls down the stairs
  • You host an event where someone slips on their way to the buffet
  • You’re a hairdresser, and a treatment you use burns a customer’s scalp
  • You’re a landscaper, and you accidentally knock over a client’s garden gnome
  • You’re a window washer, and your tool falls from your high platform, damaging a car beneath you

As you can see, public liability insurance is vital if you have any dealings with third parties whatsoever. No matter how hard you work to tick all the right boxes, you just can’t control everything — except your peace of mind.

It’s also essential that you understand the limits of your coverage. There are some situations where your policy may not pay out.

One such scenario is where your excess (the amount you must pay in when you make an insurance claim) is greater than the amount you claim. 

Another is if you don’t meet the requirements you agreed to in your policy (such as maintaining safety standards, for example).

How much does public liability insurance cost (UK)?

The cost of public liability insurance depends predominantly on how much of a risk an insurer deems you to be. They look at various factors, including:

  • Type of business
  • Location
  • How much coverage you choose
  • Number of employees in your business
  • If you use dangerous tools and equipment
  • How much contact your business has with the public
  • How often you’ve made claims in the past

Read more: How much is public liability insurance? 

You can choose to be covered for as much as £10 million or as little as £1 million. (Average amounts are between the £2 million and £5 million mark.) You can also choose to pay a monthly or annual premium, which will have a bearing on how much you pay in total. 

What is the difference between personal liability insurance and public liability insurance?

Both personal and public liability insurance cover claims against you regarding a third party’s injury, death, or property loss. 

The difference is that: 

  • Personal liability insurance covers you and your family against third-party claims
  • Public liability insurance covers your business against third-party claims

So, basically, one is personal, and the other is commercial.

It’s important to note that, in the UK, personal liability insurance is usually bundled into your home or travel insurance policies. It’s not typical for it to be a policy type all on its own. If you are uncertain about your personal liability coverage, speak with your insurance provider about the details of your policies.

Public liability insurance: A summary

Public liability insurance protects your business from legal claims made against it by a third party. These could relate to injury, death, or property loss or damage related to your business. 

If you own or run a business, you should have public liability insurance in place. While it’s not a legal necessity, it’s highly advisable, regardless of the type of business you run. Your clients may also make it a requirement of doing business.

The cost of public liability insurance depends on factors such as how risky your insurer deems your business activities to be and how much coverage you want. That said, the cost of not having it can be much higher than the cost of being covered.

No matter how hard you work to put safety measures in place to protect the people and things around you, unfortunately, accidents happen, and having the right insurance in place will help protect you when they do. 

Start by getting in touch with Howden. We’ll have a look at the very specific needs of your business and go through all the steps you need to take to ensure it is properly insured. 

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