Insurance is an essential part of safeguarding your business against risks that threaten it. Many SME owners know that it’s important for to take out some form of insurance for their businesses, but it’s not always clear which types of cover are the most appropriate, and which may not be as necessary.
Public liability insurance is one of the most commonly taken out types of business insurance, and for companies in certain industries, it can provide invaluable protection. The importance and relevance of public liability insurance to your business in particular will depend on a number of variable factors, which have been outlined below.
What is public liability insurance?
As a business owner, you're responsible for your firm's activities. That means you're accountable if your business is blamed for causing injury or illness to members of the public - or damage to their property.
It doesn't matter where such incidents occur - if you're deemed to be at fault you may have to bear the costs. This is where having a public liability insurance policy in place could provide you with essential cover.
Policy wordings can be lengthy, so here's a simple public liability insurance definition:
An insurance policy that can cover the cost of any compensation, legal fees or medical bills you're obliged to pay if your business is found to have caused accidental injury or damage to a person or their property. The policy does not cover injury suffered by a business's employees, and all insurance payments are subject to a successful claim.
What does public liability insurance cover?
A public liability insurance policy can provide cover for businesses and tradespeople in a variety of sectors. Here are two examples that demonstrate where a policy would apply:
- You're a shop owner. A customer falls and hurts themselves in your store, and they decide to sue you for damages.
- You're a builder. While working on an extension at someone's house, your actions cause damage to the walls. The homeowner demands that you pay for the repairs.
Who needs public liability insurance?
The law does not dictate that businesses are obliged to have public liability insurance protection, but firms in certain sectors should strongly consider this type of cover.
A successful claim via these policies pays for certain costs a business incurs when it's deemed responsible for an accident that causes injury or damage to a member of the public or their property. The cover would meet expenses such as medical, compensation and repair bills that can result from such incidents, regardless of where they occur.
There are some sectors where decision makers are likely to consider this type of insurance a requirement. The hospitality industry, where businesses are constantly welcoming visitors and customers through their doors, is an obvious example.
In a similar way, tradespeople could also find this type of cover useful because of the fact that many will carry out work in various public locations. Firms that use heavy machinery or corrosive chemicals in public spaces may be more likely to need such policies, too, because of the risks of causing damage to public property.
Other examples include businesses that host conferences or organise gatherings in different locations, and these companies may also benefit from public liability insurance for events.
Do I need public liability insurance?
If your business has clients, customers or suppliers regularly visiting its place of work then logic dictates that there's a higher risk you'll be exposed to public liability claims. Similarly, the cover could also provide useful protection for your business if you operate in property or premises elsewhere.
Firms in virtually all sectors should consider the important role that public liability insurance could play in protecting their finances. Even if you have the most rigorous health and safety checks in place, there's always the risk of accidents happening.
There are two questions you should ask yourself when deciding whether or not you need public liability insurance:
- Do customers, clients or any other third parties ever visit my premises?
- Does my business carry out any work in other properties or premises?
If your answer to either of these questions is yes, then public liability insurance could help to protect your business.
Beyond accidents, there is another factor that business decision makers should take into account - not having a public liability insurance policy may restrict your business's opportunities of securing work. The reason for this is that many organisations will not award contracts to firms that haven't purchased certain forms of cover.
Of course, every company has its own unique features and your need for public liability insurance will depend largely on your attitude towards risk. However, you should also note that many big businesses and organisations – especially public bodies and local authorities – are likely to insist that you have public liability insurance in place before working with you. This means you could be at risk of missing out on trade vital to your business if you haven't got the appropriate policy in place.
How much does public liability insurance cost?
It’s very difficult to give indicative figures for the cost of public liability insurance without properly taking into consideration a business’s exact and unique circumstances. As such, it’s not really possible for a broker or insurance provider to give you an accurate public liability insurance quote without analysing the threats that your business is specifically vulnerable to.
There are a number of variable factors that could influence the overall price of your business’s public liability insurance policy. Some of these could include:
- Premises location
- Premises size
- Number of employees
- Employee skill level
- Frequency of visits to third party properties
- Frequency and volume of third parties visiting your premises
It is, however, important to thoroughly compare public liability insurance quotes before making a decision to ensure you're getting the best price possible for you.
Things to consider
- If you also require employers' liability insurance, consider combining it with your public liability insurance cover as this could work out cheaper and more convenient rather than arranging each policy separately.
- You may be worried about the cost of public liability insurance, but don't be tempted to skimp on cover as this could come back to hurt you financially should you need to claim.
- When searching for a new public liability quote, the cheapest policy is not always the right policy for you and your business. Make sure you do a thorough public liability insurance comparison.
Get a quote with Make It Cheaper and you can talk to a specialist in our UK-based call centre, who will offer advice and guidance to get the right level of cover from a trusted insurer.
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