What is Public Liability Insurance and Will You Need it for Your Business?
One of the most important considerations to make when you’re setting up your own business is the different types of work and business insurance you’ll need to ensure you’re protected against financial loss. One of these is public liability insurance. But what exactly does public liability insurance mean? What does it cover, and when will you need it for your business? We’ve set out answers to these questions, as well as a few more, below.
What is Public Liability Insurance in the UK?
Public liability insurance is one of the main types of business insurance in the UK, available for firms of all sizes across a variety of industries. It covers you if a member of the public (whether that’s a client, a customer, or even a passerby) claims that they have been injured or that their property has been damaged as a result of your business activities.
Essentially, it’s a type of insurance designed to protect business owners against lawsuits. In the event that a claim against your company did become a legal matter, a public liability insurance policy would cover the cost of your expenses, including any compensation you ended up having to pay.
When Might You See a Claim?
There are several different circumstances that might see you faced with a public liability claim, but the most common cause is negligence. For example, a client or customer may injure themselves on a piece of equipment you own, or slip and fall on a surface at your premises. These types of insurance policies also generally cover any property damaged, so if a client’s own property, such as a laptop or work phone, was damaged by you during a meeting the cost of repair or replacing it would be covered.
What Does Public Liability Insurance Cover?
As a type of business insurance, public liability insurance will cover claims made against your business by members of the public. These claims of compensation could be for personal injuries sustained, loss or damage to property, or even the death of an individual.
Claimants may be clients, customers, or passersby, as mentioned previously, but may also be other individuals that you work with or near to, such as:
- People taking part in events or activities you have organised
- Visitors to your premises (such as people watching events or activities you have organised)
The specific details of your policy may depend on your insurer, but most should ensure that you are covered for incidents that occur on your business premises, as well as incidents that occur off-site at events or activities your company has organised.
Does Public Liability Insurance Cover Employees?
Public liability insurance doesn’t cover employees (permanent or temporary), students, or people on work placements. To make sure you’re covered for these team members, you’ll need employer’s liability insurance. You’ll legally be required to have a policy for this in place if you employ more than one person on your team.
What Else Is Not Included in Public Liability Insurance?
Public liability insurance doesn’t cover any injury to you or to your team, as well as damage to your property. This should all be covered within your general business insurance and employer’s liability insurance policies.
Your policy may also not cover all possible costs. All insurance policies have an excess, meaning that they have an amount you will have to pay yourself if someone makes a claim against you. For example, if you cause £5,000 worth of damage to a property and you have an excess of £250, your insurer will pay £4,750. You will then be expected to cover the difference.
What is the Difference Between Public Liability and General Liability?
There isn’t a difference between public liability and general liability insurance. They are just country-specific terms for the same thing. Public liability is the name given to this insurance type in the UK, while general liability is the name given to it in the USA. The cover given will always depend on your specific policy, but there shouldn’t be any cause for concern if you read one term instead of the other.
When Will You Need Public Liability Insurance?
For most businesses, public liability insurance isn’t a need or a legal requirement. However, it is highly recommended that you set yourself up with a policy if:
- You own a premises that members of the public, including customers, clients, and others, visit
- Your business organises offsite activities and events that members of the public attend
- You run your business from your home and members of the public visit you for work-related purposes
It should be noted that you will legally be required to have public liability insurance if you own and run a horse riding establishment. This is because you will not only have to be covered in the event of an injury to clients or customers coming to you for lessons or rides; you will also need to be covered against potential claims from members of the public that riders could meet on roads and trail routes.
Do You Need Public Liability Insurance if You are Self-Employed
It doesn’t matter if you own a large corporation or a small business that has only just started up; you will not be obliged to cover your business under most circumstances. This includes cases where you are self-employed.
It’s also possible to get freelance cover if you’re self-employed and visiting the home of a customer or external business premises. This kind of insurance covers you in the event that damage is done to their property while you are working.
How Much Public Liability Insurance Will You Need?
It will be up to you how much public liability insurance you need, though you may wish to check with your potential clients before you settle on a policy. This is because some clients and customers may expect you to have a certain level of cover, so that they know they will be protected when conducting business with you.
There will also be some other factors to take into account when deciding on the best policy for you. Arguably, the most important of these is the cost of your overall policy.
The Cost of a Public Liability Insurance Policy
Costs for public liability insurance policies can often vary, owing to the nature of business and depending on the type of industry your own business operates in. To work out how much coverage your business is going to need (and therefore how much you’ll need from your budget), you will need to consider a certain set of factors. These include the potential extent of compensation claims made and how much it could cost to repair any damage done to property.
Other details that you will need to consider, and that will likely end up determining the amount of cover you’ll need for potential legal fees and compensation, include:
- The size of your business
- The level of interaction your company will have with members of the public
- The level of risk associated with your industry
- The scale of contracts
- Your claims history
What Happens if You Don’t Get Public Liability Insurance?
Technically speaking, in most cases nothing will “happen” to you if you don’t get public liability insurance. It isn’t a legal requirement unless you own and run an establishment that offers horse riding. Bearing this in mind, it is also important to note that you may come to regret it if you don’t have an insurance policy in place and someone sues your business.
In these cases, you will need to be able to pay for your own solicitor, and fees will only add up from there if the claim against you is successful. You may even end up having to cover the legal fees of the person suing you, and you can still be left with heavy legal costs to pay even if you do win your case.
It is possible that you may be able to claim back some of these expenses from the person who made the claim against you, but these are rarely ever paid for in full. As such, you should always be sure that you either have the budget set aside for potential legal fees, or insurance in place to cover your business.
Further Tips on Public Liability Insurance
As well as the information we have provided above, there are some other things you may want to bear in mind when considering public liability insurance for your business:
- Cover will only last as long as you pay your premiums, so it is important to remember to stay up-to-date
- If your situation changes (for instance, your company grows or shrinks), you will need to update your policy to reflect the amount of cover you need
- Public liability is an “allowable expense”, meaning it’s tax deductible
Finding Business Liability Insurance
There are many insurance companies available in the UK who will be prepared to offer your firm a public liability insurance policy. There are also a number of comparison websites, such as MoneySuperMarket and Compare the Market, who will be happy to help you do a price and information comparison so that you can find the policy that suits your needs and the needs of your business best.
They may expect some information from you when you begin looking at quotes, in order to offer you the most suitable deals. This is why you should have the following information on hand when you start looking for public liability insurance:
- Your trade or profession
- The type of business you own (whether you’re a sole trader, partnership, or limited company)
- How long you have been in business
- Your expected turnover for the year ahead
There won’t be a particular comparison website that is better to search from than the others. There will only be the one that shows you the best policy for your business. As such, we would always recommend conducting careful research and choosing your policy after considering different options from different websites.
Public Liability Insurance and Criminal Records
We should also note that it may be difficult to obtain a public liability insurance policy if you have a criminal record. This normally doesn’t cover spent convictions (convictions that have reached a set period and have been removed from a record) or motoring offences, but may be applied in other cases.
Many insurance brokers will offer specialist help with obtaining a policy if you do have a criminal record, but will also expect you to inform them that you have one. If they don’t ask and you don’t tell them, it is possible that your insurance will be void in the event of a claim being made. If this should happen, the claims may not be paid and you will be expected to pay the claimant from your firm’s own budget.
Do You Need a Professional Address for Your New Business?
If you are just starting up with your own business and you need to make sure your budget stretches to cover the costs of legal fees or expenses not covered by insurance, why not consider saving money with a serviced office space? Halkin’s luxury portfolio of properties across the capital can offer you the fully maintained space you need in a prestigious address, all at a cost-effective price for your business.
As all of our spaces come with flexible permanent and semi-permanent contracts, you will also have the option to move your business to somewhere new as it grows and expands. The space you choose will then be made over to suit the ethos and values of your brand, so you will never have to worry about setting up your business in an office that doesn’t fit your firm as you need.
We’re also fully prepared to offer comfortable meeting rooms with state-of-the-art technology and communications capabilities if you’re still in the stage of needing to impress investors. Contact our team to discuss making your booking and find out what we can offer your growing firm and its budget today.