Small business public liability insurance

What is public liability insurance for a small business?

Small business public liability insurance covers you if someone’s injured or their property’s damaged as a result of your work. Say a client, supplier or member of the public makes a claim against you, public liability insurance could cover your legal costs, as well as any compensation due.

What does public liability insurance cover?

Public liability insurance covers compensation claims if someone makes a claim against your business. Most public liability insurance policies include:

• Medical costs cover – if someone suffers an injury or illness and your business is at fault, you could be liable to pay for their medical treatment.

• Property damage cover – if you or one of your employees damage someone’s property in the course of your work, it’s likely you’ll have to pay for the repairs.

• Compensation claims – if a member of the public takes legal action against you, you could face a compensation claim.

What doesn’t public liability insurance include?

There are several situations public liability insurance policies typically don’t cover. You won’t be covered if your employees are injured on the job, for instance – for that, you need employers’ liability insurance.

You won’t be covered for fines or penalties, either. And there may be exclusions around pollution or asbestos. Check any policy before buying, so you know exactly what’s covered.

Why do I need public liability insurance for my business?

Public liability insurance isn’t a legal requirement for business owners, but if you deal with the public, it’s worth adding to your business insurance policy.

Small businesses and sole traders lack the resources of larger companies. If someone makes a claim against you, you might not have the internal support to deal with it.

Unlike a large company, you probably don’t have a legal team – insurance could help cover the cost of legal advice and court proceedings.

Some organisations, such as councils, won’t work with you unless you have public liability insurance in place. Even if it’s not formally required, having this type of insurance shows that you take your responsibilities seriously.

When public liability insurance can be useful

With a small business, even a minor claim could wipe out your profits and put your business at risk.

Here are some scenarios where small business public liability insurance is useful:

• A plumber sued when flooding during a repair damages carpets

• A customer who suffers a reaction to a hairdresser’s products

• A market trader whose stall collapses on a passerby.

In situations like these, public liability insurance cover could help resolve the issue, covering everything from legal fees to compensation.

What kinds of small businesses need public liability insurance?

Public liability insurance is worth considering if:

• You have an office or premises that members of the public visit

• Your business organises or hosts events and activities

• You work from home and customers visit you there

• You work anywhere the public accesses, such as the street

• You want to set up a stall at a market or craft fair – you may find public liability insurance is a requirement.

How much does liability insurance for a small business cost?

Our figures show that 51% of people could achieve a quote of £65 per year for their public liability insurance^[1].

The cost of public liability insurance policy varies, depending on:

• The insurance provider

• The nature of your business

• Your claims history.

Premiums will be higher if your business is considered risky – say, you work up ladders or in high temperatures. The more information you provide, the easier it will be for insurance providers to find a policy that fits your needs.

^[1] _{51% of people could achieve a quote of £64.02 per year for their public liability business insurance based on Comparethemarket data from March 2023.}

What’s the best liability insurance for a small business?

Choosing public liability insurance for your small business? Here’s what to look for:

• Level of cover – the maximum amount your insurance provider will pay out. The lowest cover level is usually £1 million and you may consider this enough. But if your business gives you lots of exposure to the public, you might want to consider a higher level of cover. Some insurance providers offer up to £5 or even £10 million.

• Your contract requirements – check whether your clients require a certain cover level. Local authorities usually ask for a minimum cover level of £5 million, but some may want £10 million. It’s worth checking your insurance is up to scratch before you bid for contracts.

• Business activities covered – check exactly what activities your policy covers and that exclusions won’t affect you.

• Compensation for loss of work – this could be invaluable if you have to go to court and miss work.

What’s the public liability insurance limit for a small business?

A public liability insurance limit is the maximum amount you can claim for. There are different cover levels available, and if your business carries greater risk, you might decide you need a higher limit on your policy.

Remember, your public liability insurance policy needs to include enough cover for compensation costs, legal fees and any medical or repair costs.