What is public liability insurance and does my business need it?
While it’s not a legal requirement to hold Public Liability Cover your business could face costly compensation payments if you were to get sued by a member of the public for injury, illness or damage to property.
If your business or employees interact with the public in any way then public liability insurance will offer invaluable protection from the risks associated with this. This could include customers or other personnel visiting your premises (even delivery drivers) to your employees working off-site at a client’s premises.
Incidents which could lead to a public liability claim against your business include anything from a customer or visitor slipping on a wet floor in your office or shop, to a member of the public being injured by a piece of work equipment, or something falling from a ladder for example.
It would also offer cover if you if you were to cause damage to somebody else’s property (up to the limit of the policy)
An example of this might be causing accidental damage to a computer screen while working at a customer’s premises, or damage to furniture or fixtures while carrying out other repairs, or even spilling paint on an office or customer’s carpet if you were a decorator.
(Just examples, but common everyday occurrences)
In addition to protecting your business from mishaps, public liability insurance also has potential to benefit your business by opening it up to new opportunities where an organisation or trading authority may require a certain level of insurance in place.
In a nutshell, Public Liability Insurance covers the cost of claims made against your business by a customer or member of the public should your work-related activities result in injury or property damage.
Public liability insurance acts as a financial barrier protecting the business against the punitive cost of compensation pay-outs and legal fees.
Is public liability insurance a legal requirement?
In the UK, public liability insurance is not a legal requirement for business and choosing not to take out this type of cover is not a punishable offence, unlike Employers Liability Insurance which is patrolled by the HSE and can lead to substantial fines.
However, having public liability cover in your suite of insurances can add a certain professionalism to your business, and for a lot of clients you might deal with it’s a requirement that you do have a certain level of cover.
In fact, these days up to £5m pounds cover is pretty much the norm, and often the required cover by a client is £10m.
The last thing any business owner wants, or needs is to get bogged down by a claim from a valued customer over the consequences of an accident or damage to property. Having public liability insurance in place means that a business owner has peace of mind knowing that he or she can let the insurer deal with any problems while getting on with running the business. Plus, it also gives the client confidence that the matter is being professionally dealt with.
Is public liability insurance required as a sole trader?
For sole traders it can be a bit of a grey area as to whether public liability cover is required.
If you are a sole trader it all very much depends upon the nature of the business and how you interact with the clients. Your work as a sole trader may not be any different from that of a company employing people.
If for example you are a sole trader electrician, you still might find yourself liable in the event of a customer or member of the public tripping over your toolbox or falling through an open floorboard for example.
It’s quite likely in an instance like that the injured party would seek some sort of compensation. Unfortunately, that way of thinking now seems to be in the fabric of our culture.
Even if you work from home as an online marketer or trader and don’t go to visit clients or conduct your work in a public space, you still need to consider who comes to your door.
Perhaps you have business supplies delivered, or you ship out parcels from a little packing station or craft room in your garage.
If the delivery or collection man were to trip over your broken garden path or trailing extension lead and broke his arm, he’s still entitled to make a claim for injury as you have a duty of care to ensure safe access and egress at your place of work.
As a sole trader, having public liability insurance in place means you will be covered for the cost of settling the claim, including compensation pay-outs and legal fees. Without public liability cover, the cost of dealing with a court case has the potential to be incredibly damaging to the business and to your personal finances.
Whether you work from home, an office or in a public space, if there is an accident related to your work which causes harm to a person or damage to property, you could be held accountable and it would be your responsibility to put it right.
What other insurance would I need as a sole trader?
As a sole trader, your insurance requirements will vary depending on the type of work you do and where you work from. If you offer professional advice or consultancy, it may be worth considering professional indemnity insurance alongside public liability. This will protect you if a client makes a claim against you for making a professional mistake, alleged negligence or offering advice that led to them making a financial loss.
However, don’t forget. While the business may operate as a sole trader, if you employ just one member of staff it then becomes a legal requirement to have employers’ liability cover.
This will cover the business against the financial burden of claims from employees due to injury or illness, caused by their work.
Other cover that might be required would be cyber and data insurance if your work involves collecting and storing personal data from visitors to your website for example.