A Beginner’s Guide to Public Liability Insurance

What is public liability insurance?

Firstly, let’s start with the most common question, what is public liability insurance? In the UK, public liability insurance is the name for business insurance which covers you against claims made by the public, customer or client which arise from your business activities and result in accidental bodily injury or accidental loss or damage to their property for which you are held responsible. An important exclusion is loss or damage to property in your care, custody or control and products liability.

For businesses that make, sell, supply or repair products, then additional cover known as products liability insurance is available to be purchased alongside public liability insurance.

Is public liability insurance mandatory?

No, public liability insurance isn’t mandatory, but highly recommended for peace of mind.

So, why should I get public liability insurance?

It isn’t a legal requirement however it can protect you financially if a member of the public, customer or client takes legal action against your business. This could include injury, property damage or mental health issues arising as a result of your business activities. These risks are present in all businesses, and not solely restricted to contracting trades.

You may also find that you might lose out on lucrative contracts as some clients / contractors may require that you have public liability insurance and request proof before they agree to work with you and give you the contract.

What does public liability insurance cover?

Public liability insurance will cover the cost of legal defence fees for allegations of negligence against your business and make pay-outs where it is proven that you are responsible for the accidental injury or damage caused.

What happens if someone takes legal action against my business and I don’t have public liability insurance?

If a member of the public, customer or client takes legal action against your business and you don’t have public liability insurance, you will have to pay your own legal defence fees and any settlement amounts, regardless of, whether you win the case or not.

How much public or products liability cover do I need?

Towergate can offer public and products liability insurance policies with cover limits from £1 million up to £10 million or higher. The amount you need will depend on several aspects:

  • Your business activities
  • Whether you work solely at a premises or any work away elsewhere
  • The type of locations and environments you are working in, the processes involved, particularly if these are of a high-risk nature involving any application of heat-work e.g. blow lamps/torches or welding.
  • If your activities are of a hazardous nature e.g. are at depth, height or involve the use or supply of hazardous liquids or goods.
  • The value and occupancy of the properties you are working at e.g if using blowtorches onsite in a large office building, how much would the building cost to rebuild in the event of a serious fire? What type of businesses are trading there (e.g. financial institutions, IT companies) and the time period their business will be interrupted?
  • When you are contracting with companies, you should check with them to find out if there is a minimum amount of public liability insurance required to work for them. Also, consider any local authority requirements
  • For products liability, it’s the type of goods you sell – whether you make them, assemble, import them, service, repair or just supply. Yor annual turnover and details of any exports. Insurers will commonly want this broken down between territory – UK, Europe, USA/Canada, Rest of World. The contractual terms between you and your suppliers are very important. Insurance companies will be keen to ensure that you know where goods are sourced and manufactured, and that you have not signed up to any hold harmless agreements, waiving your rights of recovery back to suppliers and manufacturers, should they ultimately found to be responsible for the claim that may arise from the supply of goods.

Where do I start?

For more information visit our public liability insurance webpage or call 0344 892 1664 to speak to one of our advisors.

Courtesy of Towergate Insurance

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