Small business public liability insurance

As a small business, you might think you can do without public liability insurance. But it can give you crucial help in covering you against claims, legal fees and other costs if someone is injured or property damaged as a result of your work. Find out what it is and how it works.

As a small business, you might think you can do without public liability insurance. But it can give you crucial help in covering you against claims, legal fees and other costs if someone is injured or property damaged as a result of your work. Find out what it is and how it works.

Emily Kindness
From the Business team
minute read
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Posted 5 JUNE 2020

What is public liability insurance for a small business?

Small business public liability insurance can protect you against claims and legal costs from a person (for example, a client, supplier or member of the public) who suffers injury or damage to their property, either at your place of work or while you’re working off-site.

Am I legally required to have public liability insurance?

No. Public liability insurance isn’t a legal requirement, but if you deal with the public then it’s a good idea to consider adding this cover to your business insurance policy.

Small businesses don’t have the same resources as larger companies and if someone made a claim against you, you might not have the internal support to deal with it. For example, unlike a large company, you’re unlikely to have a legal team, so insurance could help you cover the cost of any legal advice and proceedings against you.

With a small business, even a minor claim against you could wipe out your profitability and put your business at risk, depending on how large a cash reserve you have. It could even end up putting you out of business.

Just imagine some of these scenarios where a business could face issues:

  • an event organiser getting sued by an attendee who’s injured themselves tripping over something left lying around
  • a plumber sued for damages to floor coverings by an accidental flood during a repair
  • a customer who has a scalp problem after having a reaction to hair dye a hairdresser has used
  • a small manufacturer being sued because their product injures someone or damages their property
  • a window cleaner breaking an expensive pane of glass in someone’s home.

In these kinds of cases and similar situations, public liability insurance can help you to resolve the issue, from covering legal help to paying out compensation.

Some organisations might require you to have public liability insurance before they even consider working with you. Having this type of insurance also indicates that you take your responsibilities seriously, even if it’s not a formal requirement.

What small businesses need public liability insurance?

It’s worth considering if:

  • You have an office or business premises where members of the public visit
  • Your business organises or hosts events and activities
  • You work from home and customers come to see you there
  • You work anywhere the general public has access to, such as the street or at a customer’s site
  • You want to set up a stall at a market or a craft fair – in these cases, public liability insurance may be a requirement before you’re given a pitch.

I have professional indemnity insurance. Do I need public liability insurance too? What’s the difference between the two?

Professional indemnity insurance can protect you against claims for compensation because you gave clients bad advice, for data breaches, bad design or poor specifications and so on. Public liability insurance is designed to cover you for accidents, injuries and damage to property.

For example, if you’re a consultant who meets clients in your home and one of them trips and injures themselves, public liability insurance could cover you if they made a claim against you. But if you breached their confidentiality by accidentally sending an email to the wrong person, then professional indemnity insurance could help.

What should I look for in small business public business liability insurance?

When choosing public liability insurance for your small business, look for:

  • Level of cover – this is the maximum amount your insurance provider will pay out. Typically, the lowest standard level of cover is £1 million and you may consider that this is sufficient for your business. However, if your business means you have considerable exposure to the public, you might want to consider a higher level of cover. Some insurance providers will offer up to £10 million.
  • Your contract requirements – check whether any of your clients require a certain level of cover. Local authorities usually ask for a minimum cover level of £5 million before you can tender for work, but some may want a minimum of £10 million. It’s worth checking before you tender for contracts that your insurance fulfils any requirements.
  • Business activities covered – check exactly what activities are covered by the policy and that there are no exclusions that might affect you.
  • Compensation for loss of work – this could prove invaluable if you have to go to court and miss out on a few days of work.

What isn’t included in public liability insurance?

If you’re a small business, it’s also worth knowing what’s generally excluded from public liability insurance. You won’t be covered for any injury to yourself or your employees – for that, you need employers’ liability insurance.

Nor will you be covered for the cost of any fines or penalties you incur. There may also be exclusions around damage that occurs from pollution or asbestos, so make sure you check any policy before you buy so you understand exactly what you’re covered for.

How much does small business public liability insurance cost?

Costs vary depending on:

  • the insurance provider
  • the nature of your business
  • your previous claims history.]

Premiums tend to be higher if your business involves more risk – such as working at height or in high temperatures. The more information you provide upfront, the easier it will be for the insurance provider to find a policy that fits your business.

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