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What our Nerds say about public liability insurance

Public liability insurance protects your business if a third party – such as a customer or a visitor – is harmed or dies, or their belongings are lost or damaged, as a result of your business activities.

Holly Bennett Writer at NerdWallet

What is public liability insurance?

Public liability insurance protects your business if it’s held responsible for injury or accidental death to a member of the public, a client or other visitors or for damage or loss to their property.

The cover helps pay legal fees for defending a claim, including the cost of a solicitor and any compensation payment.

For example, it may be able to cover you if:

  • a customer slips over and injures themselves in your shop or cafe
  • a tool or ladder injures a passer-by or damages their car
  • you make a mistake, such as using the wrong equipment or fitting something incorrectly, which harms a customer.

Why is public liability insurance important?

Public liability insurance is important because it helps pay any associated legal fees for defending a claim if it goes to court, including solicitor’s fees and any compensation that’s awarded. This might include:

  • medical or rehabilitation fees after injury
  • compensation to beneficiaries after an accidental death
  • property repair bills after damage
  • loss of earnings

Without this cover, the cost of settling a claim could run to tens of thousands of pounds or even more, depending on the incident.

This cover can be important if you’re a member of an industry body or you work with certain clients, and you may not be allowed to do your work without this cover.

Even if it isn’t a necessity, it could be sensible to get it. For example, if customers use your premises, or you work in people’s homes or in public spaces, there may be a risk of someone having an accident or their property being damaged.

What does public liability insurance cover?

Public liability insurance covers injury or death of members of the public, as well as loss or damage to property. This might include clients, visitors and participants in events, and even passers-by.

The incident may happen on your business premises or while you operate at another site, and it could be anything from a customer tripping on a step to a loose tile falling on a pedestrian while a builder carries out work.

Some of the costs that public liability insurance can cover include:

  • compensation if you need to pay out for any injury or damage caused to a third party, including any loss of earnings by an individual after an incident
  • legal expenses if your business needs to go to court, for example
  • repairs of any property that your business is responsible for damaging
  • medical expenses if the NHS claims back the cost of any services or treatments it gave, for example

Do I need public liability insurance?

Businesses don’t usually need public liability cover by law. Even so, you might feel reassured knowing that you have protection from legal fees and compensation costs if your business is held responsible for injury or property damage.

Accidents happen, and your business may face risks if it comes into contact with the public. So whether you work from home and have clients visiting, sell in public spaces, exhibit at conferences or carry out a trade in customers’ homes, you may want to consider this insurance to cover those risks.

» MORE: Why you might need public liability insurance

When should I get public liability cover?

If your work means you come into contact with the public, there is no reason to delay getting this insurance. An accident can happen at any time, so it’s best to get covered as soon as possible to make sure you’re protected.

Sometimes, you will need public liability insurance before you can start working with a client or at an event. Check the terms of your contract to see if you need a particular level of cover.

You can take out public liability insurance as a standalone policy or as part of a business insurance package.

» COMPARE: Business insurance quotes

How much public liability cover will I need?

The amount of cover you might want to take out depends on a few factors, including:

  • your type of business and the risks associated with its activities
  • how often you deal with the general public
  • any requirements of membership of trade bodies, your industry or your clients

For example, government contracts tend to require a minimum level of public liability cover of between £5 million and £10 million.

Your level of cover will determine the maximum amount your insurer would pay out for a claim. You can usually find public liability cover between £1 million and £10 million. This may sound a lot, and not all businesses will need the maximum amount. But it’s important to consider all possibilities, and how compensation and legal costs can mount up, so you don’t find yourself underinsured for expensive claims.

Can I take out public liability insurance for a day?

It’s possible to take out public liability insurance for a short period, even for just a day, if that works for your business. For example, you may want cover solely for the days you sell at a market or work at an event, or an annual client dinner.

» MORE: What does public liability insurance for events cover?

How much does public liability insurance cost?

The cost of public liability cover can start from around £5 a month for some businesses, but the premium you’re offered depends on the everyday risks you face and factors such as:

  • how many people you employ
  • your sector or trade
  • your insurance claims history
  • the level of cover
  • business location
  • annual turnover

When you are comparing business insurance quotes, it isn’t just about cheap premiums. Check what incidents are covered and the maximum amount it would pay out. Also, make sure that you can afford the excess amount, which is what you pay towards a successful claim.

» MORE: How much is public liability insurance?

How to get public liability insurance

You can buy public liability insurance online directly with a provider or use a business insurance broker. You’ll save time and effort if you’re looking to compare deals using a price comparison tool, as you’ll only need to provide the information once to get quotes from a number of insurers.

To get a quote, you will need to supply some personal information, including your name, address and information about your business. This will usually include the following:

  • your trade or sector
  • how long you’ve been trading
  • whether you’re a sole trader, partnership or limited company
  • number of employees
  • annual turnover or income
  • details of past claims

You may also be asked if you want to add other types of cover, such as professional indemnity or product liability, as a business insurance bundle.

You can then review the quotes and choose the provider that offers what your business needs, for the best price.

Public liability insurance FAQs

What other types of business insurance might my business need?

The cover your business needs depends on the risks it faces. You legally need the following:

  • If your business has employees, you need to have employers’ liability insurance by law (with a few exceptions).
  • You need commercial vehicle insurance if you use a car, van, or other vehicle as the main part of your business activities.
  • You need business car insurance if you use your car for your business (beyond commuting).

Other than that, you could consider:

Other types of business insurance you might consider include business interruption insurance and cyber insurance.

Is public liability insurance a legal requirement in the UK?

No, public liability insurance isn’t a legal requirement, unless you own a horse-riding business. However, you will need this cover if you bid for government contracts, and some clients and membership bodies may ask that you have a minimum level of cover.

Even if the above does not apply to you, it doesn’t mean you shouldn't consider it. Any business that comes into contact with the public should consider the benefits of having protection for legal and compensation costs after injury to a member of the public or their accidental death, or damage to their property, caused by your business.

What happens if I have no public liability insurance?

Without cover your business would be liable to pay legal fees and compensation costs if a member of the public has an accident or their property is lost or damaged and your business is to blame.

This may include medical bills, loss of earnings, damage repair bills and solicitor’s costs, or compensation to their beneficiaries after an accidental death. So while it’s not compulsory cover, consider that these costs could be extremely high. And for some types of work, not having cover may exclude you from bidding for contracts or taking part in off-site events.

Is public liability insurance tax deductible?

Yes. Public liability insurance, and other business insurance policies, are allowable expenses. This means the cost of these policies are tax deductible.

What’s the difference between public and employers’ liability insurance?

Public liability insurance covers legal and compensation costs if a member of the public, a client or a visitor is injured or killed, or their property is lost or damaged, and your business is responsible. Employers’ liability insurance protects your business if one of your employees is ill or injured while at work and claims compensation.

Public liability insurance is not generally compulsory, while employers’ liability insurance is a legal requirement if your business has employees, with a few exceptions. The penalty for not having employers’ liability insurance is £2,500 a day.

Does public liability insurance cover my employees?

If an employee is responsible for an injury to someone outside the business or loss or damage to their property while working, your business’s public liability insurance should cover this.

However, public liability insurance doesn’t cover you if your employee gets ill or injured during their work and they try to make a claim. To get cover for this, you would need employers’ liability insurance.

Does every business need public liability insurance?

Technically no, as public liability insurance isn’t required by law. However, as most businesses will have some form of contact with clients, customers, and members of the public, it’s a policy that many companies may want to consider having in place.

» MORE: Do I need business insurance?

Do I need public liability cover if I’m self-employed?

If you run your own business as a sole trader or freelancer, it could make sense to consider public liability insurance if you come into contact with the public. For example, perhaps clients visit your home, you exhibit or sell at public events,or maybe you provide a service to clients in their home.

If your business causes injury or even death, or is responsible for loss or damage to property, you could face compensation claims and legal costs. With public liability insurance, these costs would be covered, up to a maximum amount.

Is there anything public liability insurance doesn’t cover?

Public liability insurance won’t cover injury or illness to you or your employees as a result of their work. Only employers’ liability insurance covers any claims made by your employees.

It also won’t cover the cost of repairing any damage you cause to your own property. If you want cover for your own property, such as stock or equipment, you would need business contents insurance.

Can I get public liability insurance as part of my business insurance?

Yes, insurers offer packaged business insurance deals. Public liability insurance is only one type of insurance cover your business might need. If you have one or more employees, you will likely need employers’ liability insurance. Other types of cover this might be bundled with are professional indemnity insurance, commercial property insurance and product liability insurance. Always read your policy in detail, so you know you have the level of cover your business needs. It can also be worthwhile checking prices for separate individual policies with different providers as opposed to bundled policies as this could work out cheaper.

How do I claim against public liability insurance?

As soon as someone has made a claim against your business, or even if you’re aware of injury or damage but no claim has yet been made, you should follow the steps advised by your insurer. This includes not negotiating with the injured party and contacting the provider as soon as possible.

Bear in mind that if you are making a claim for an amount below your agreed excess (the amount you pay towards a claim), you won’t be able to make a claim against your policy and will need to pay the bill yourself.

About the author

Holly Bennett
Holly champions clear, jargon-free writing. She’s been creating finance content for leading organisations for over 10 years. Read more
Rhiannon Philps
Rhiannon is a financial writer for NerdWallet, with a particular interest in personal finance and insurance guides for consumers. Read more
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