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Business Insurance: UK guide to public liability insurance

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Public liability insurance is a very important tool for protecting your company. It covers your business against injury, death and damage to property on or around your premises or as a result of connection with your business. It is one of the most essential forms of UK business insurance and you really can’t afford to be without it.

UK public liability insurance

What does public liability insurance cover?

  • Such professional insurance covers your business against claims made by the public and your customers.
  • These claims are in relation to injury, death or damage to property suffered in relation to your business, either on your premises or as a result of your operations.
  • Claims take the form of compensation claims made against future loss of earnings, medical costs, repairs, replacement items, legal costs and damages resulting from the injury or damaged property. Without insurance for public liability, your business would be expected to pay out and this could be many thousands of pounds – which would be disastrous for most businesses.
  • Liability insurance ensures that your company can make these payouts if you are found at fault as well as covering your business’s own legal fees and other expenses arising from the claim.
  • Examples would include a customer slipping on a wet floor, damage to nearby houses caused by a fire started in your building, water damage to a property where building work hasn’t been properly finished, or a construction site accident.

Is public liability a legal requirement?

Most businesses are not legally required to take out public liability insurance (there are some exceptions such as horse riding stables). However, because it covers such vitally important areas, you may find that without it many clients and customers won’t do business with you. So whilst not a legal requirement, it is really a necessity of good business practice and professionalism, not to mention safeguarding your business for the future.

What level of coverage do you need?

The public liability cover you need to take out will be tailored to your business, taking into account the following criteria:

  • Type of industry your business trades in
  • Size of the business
  • Number of employees
  • Annual turnover
  • Previous claims
  • Health and safety records and procedures
  • Business location and how much business is conducted off site

Obviously different industries and business sizes carry different levels of risk, and your public liability insurance costs will reflect this. Liability insurance brokers start cover at £1m, for companies that have little public interaction, although most small or medium businesses consider a level of cover closer to £6 to £10m as many clients will not work with a company whose coverage is under £5m.

So does there ever come a point where you have taken out too much cover? And how do you know how much coverage is enough? Well, the only thing worse than being over-insured is being under-insured, so it is always sensible to go for the highest level you can afford. Many industries have set guidelines for minimum public liability insurance levels, so it is essential to research this as well.

Whatever your business (construction company, body piercing, tattooist, children’s entertainer or other), we advise you to ask for quotes  for public liability insurance and compare several business insurance companies.