What is public liability insurance and who needs it?

There can understandably be a lot of confusion about public liability insurance, including what exactly it is and how it differs from the similarly-named employer’s liability insurance. However, perhaps the most pressing question on your mind right now is: do I need public liability?

The answers to these questions aren’t straightforward. However, through this article, we can address several points of confusion and shine a light on whether you really require this cover.

A simple definition of public liability insurance

When you run your business, it might be routine for you to regularly work close to members of the public or their property. However, as a result, your business runs the risk of accidentally injuring one of these people or damaging the property. In either case, the inconvenienced third party could sue.

If this does happen, public liability insurance can fund legal expenses and compensation for which your business is liable due to this legal action, Small Business explains.

What exactly is covered by public liability insurance?

Accidents are covered; the Health and Safety Executive’s definition of an accident is a separate, identifiable and unintended incident causing physical injury. Property damage is also covered and falls into two categories: physical injury to tangible property and lost use of tangible property.

In the former case, the incident must have caused the property’s condition to worsen, while the latter case refers to tangible property which has not been inflicted with physical injury.

How does public liability differ from employer’s liability?

If an employee suffers an accident or injury as a result of the business, public liability wouldn’t cover this, but employer’s liability would. Another major point of difference with employer’s liability is that, unlike public liability, it is a legal necessity – provided that you have one or more employees.

How can I tell whether I really need public liability insurance?

This leads nicely on from the previous point, as public liability is not legally needed in any circumstances. However, you might find that you are putting unnecessary fetters on your company’s growth and success if you attempt to forgo taking out public liability.

That’s because there are many situations in which public liability can still be necessary in one practical way or another. For example, if you will be putting on an event, the local authority or venue will likely insist on you holding a policy in this insurance.

You might also notice that some client contracts specify not just public liability insurance but also a particular level of this cover. Startups.co.uk cautions that, typically, government contracts request a minimum of £5 million in public liability cover.

On the whole, even if you don’t see any cast-iron necessity for your particular firm to hold public liability insurance, taking it out could still give you valuable peace of mind. After all, having to fight a costly legal case could, financially, severely hit your company – even to the point of bankruptcy. For this reason, tradesmen and professionals should seriously consider public liability insurance.

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