Public liability insurance explained

There aren't many types of business that can justify not taking out public liability insurance. Business, by its very nature involves contact with people outside of a company and it is these people or ‘third parties’ that public liability seeks to protect.

What does public liability insurance cover?

If your business is responsible for injuring a member of the public or ‘third party’ (i.e. not an employee of your business) or for damage or destruction of their property, public liability insurance would cover you for any related costs, such as compensation payouts, the cost of repairing damage, or legal expenses incurred in defending the case.

Why is public liability insurance necessary?

This type of insurance is there to protect your business from unexpected financial loss. Public liability claims have the potential to run into the thousands and your business may not have the finance to cover that cost.

Accidents can happen at any time and it could be something very simple or something really serious. For example, you might spill your coffee on a client's computer and damage it, or someone might trip on a piece of your equipment or slip on your wet floor. On the more serious side, your faulty workmanship might cause a flood or fire, or you could be responsible for a life-threatening injury.

If you were found liable for such an incident, you would end up facing a financial claim that could potentially cripple your business. Public liability protects your business from a financial standpoint and it protects the interests of public by ensuring they can claim appropriate compensation.

How much public liability cover will I need?

The level of cover you will need depends on the risks involved with your business. You can take as little as £2 million if your business has little interaction with the public or as much as £10 million if your business is high risk or involved with government contracts. Certain business types might be subject to certain requirements by clients, for example a DJ would need to make sure he or she has the correct level of cover required by a venue.

How can I get a good deal?

You can buy public liability insurance as part of a single policy which can also include other covers relevant to your business.

Premiums for business insurance can vary widely and depend on what is included and excluded in the policy. The good news is that these days a business doesn’t have to rely on a broker. It's easy to compare quotes and buy online.

In the next part of our guide we'll explain what employers‘ liability insurance is and why it's compulsory for many businesses.

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Employers' liability insurance explained »