A useful guide to public liability insurance for small businesses

What cover does public liability insurance provide?

Public liability insurance (PL) covers claims of injury or property damage from a member of the general public against your business. This could include customers, clients, suppliers or passers-by who have sustained an injury e.g. from falling over a trip hazard on your premises. Or it could include a customer who’s property you have accidentally damaged e.g. you’re a carpet fitter and when carrying carpet in a customer’s home, you accidentally damage a wall, door or other item of their property.

Public liability insurance can also cover the cost of your legal defence, compensation payments, medical costs and loss of income as a result of the claim against you. In a nutshell, the policy can cover:

Legal expenses –The policy covers your legal fees if a claim be made against you.

Cost of repairs to damaged property – Costs to fix damaged property, such as an accidentally breakage in a client’s office during a meeting, cost of repairing or cleaning damaged carpets in a customer’s home after an accidental plumbing leak caused during some plumbing or remedial work.

Medical fees – Treatment fees, including ambulance call-out, if a claim is made against you for these.

Compensation claims – Compensation awards for accidental injury to a member of the public or damage to their property if an accident occurs on your business premises or your client’s premises.

What is not included in public liability insurance?

There are a lot of common misconceptions about business insurance policies and what they cover. It’s important to be aware that public liability insurance will not cover your employees if they sustain an injury because of the work they do for you. For that you will need employers’ liability insurance.

Nor will you be covered for allegations of negligence in work you do for a client. For that you will need professional indemnity insurance (PI).

Even though public liability insurance covers you for accidental damage to property, you must read your policy document to discover what is excluded as there will likely be exclusions in your policy in relation to pollution and asbestos.

Find out more about the differences between these policies here.

Why does a small business need public liability insurance?

Public liability insurance has become a vital form of business insurance protection for small businesses who have contact with clients, suppliers and the general public.

It can cover legal costs for defending liability claims and pay compensation awarded to a claimant if your business is found to be at fault, providing you with peace of mind that your business has the necessary cover.

What type of small businesses benefit from public liability insurance?

It’s important to safeguard your business if you deal with the general public. With public liability insurance you can also safeguard the people who your business interacts with.

It’s worth considering PL insurance for your business if:

• You have business premises where clients, suppliers and members of the general public visit you.
• You work from home and clients visit you there. Ideal if you’re self-employed.
• Your business organises or hosts events or activities. Perfect if you’re a venue for business networking meetings, charitable events, community groups, and even for parties.
• You have a stall at a makers market or craft fair or other vendor fete where there is public access. For these types of vendor events, holding public liability insurance is likely to be a prerequisite of being approved for a pitch.
• You work where the public has access. For example, you could be a subcontractor for construction work in a public space or for roadworks, which could mean you needing to divert public access around your work site.

How much does public liability insurance cost?

The cost of any insurance policy depends on your level of risk. However, at Caunce O’Hara we offer public liability insurance as part of a combined liabilities package, which includes public liability insurance (£1million of cover), employers’ liability insurance (£10million of cover), contents insurance, portable equipment insurance, and directors’ and officers’ liability insurance. Cover for this package begins at £112.00 per annum*.

* The annual price quoted is based on a marketing consultant with a turnover up to £50,000 per annum, requiring the abovementioned covers, and with no claims history and meeting all underwriting criteria.

What should businesses look for when choosing public liability insurance?

There are a number of key points to consider when choosing your PL cover, including:

The level of cover you need – The level of cover is the maximum amount that your insurer will pay out in the event of a claim. For public liability £1million is usually the lowest level of cover offered, but you may feel that you need a higher level of cover if you have significant exposure to the general public. Levels of cover available from Caunce O’Hara are £1m; £2m; £5m; £10m per annum.

Click here for a PL insurance quote.

Your business activities are covered – Before agreeing to go on cover, ensure your business activities are fully covered. If some of your key activities are excluded from cover you may wish to look at a different PL quote.

Meeting your contractual requirements – This aspect of cover is especially relevant if you are a sub-contractor, contractor or freelancer. Many contracts stipulate a minimum level of business insurance cover before you can be awarded the work. For many clients, the minimum level required is £5million of cover. Check the requirements of the tender to ensure you meet the clients’ requirements.

You are adequately compensated for loss of work – This aspect of cover could be important if you have to attend legal proceedings which could result in you losing valuable work days, impacting on your income.

What is the public liability insurance limit for small businesses?

The insurance limit refers to the maximum amount you can make a claim for, based on your public liability policy. When arranging your policy, it is important to consider how much cover you need in case of any claim being made against you. So, if you have a lot of in-person dealings with members of the public, or if your business has a higher level of risk, then you’ll need to consider a higher level of cover.

When it comes to winning contracts for work, some businesses and industry regulators and membership bodies might stipulate that you hold a minimum level of cover.

What insurance do I need as a small businesses?

There is only one insurance policy that you are legally required to hold as a small business, employers’ liability insurance (EL). EL insurance covers your business if one of your staff members claims they’ve suffered an illness or injury as a result of working for you. The policy covers legal and compensation costs involved in defending the case. It is important to follow the law, because if you do not hold EL insurance and you employ staff, the Health and Safety Executive (HSE) can fine you £2,500 for each day you are uninsured.

Other policies to consider include:

• Public liability insurance (PL) as we’ve already mentioned.
• Portable equipment insurance
• Professional indemnity insurance (PI)
• Directors’ and officers’ liability insurance (D&O)
• Legal expenses insurance
• Personal accident insurance
• Cyber liability insurance
• Commercial crime insurance

Click the ‘Start Your Quote’ button for a quick online quote for your business insurance.

Sources:

https://companieshouse.blog.gov.uk/2019/04/30/what-insurance-does-a-small-business-need/

https://www.gov.uk/employers-liability-insurance