Do I Need Public Liability Insurance?
If you regularly come into contact with clients, customers or visitors, then you may need public liability insurance. And even though it isn’t a legal requirement, it can still become a necessity for certain businesses. Below, we look into who needs public liability insurance.
It can be easy to read the ‘public’ in public liability insurance, and start to think that you don’t need such a policy.
However, when you start to break down what ‘public’ means in this context – not only customers, but clients, visitors, and any other third party that interacts with your organisation – the scope of which businesses might need public liability insurance is revealed.
Read on to find out whether you need public liability insurance, and how much cover you should consider.
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Is public liability insurance a legal requirement?
Unlike employers’ liability insurance, public liability insurance isn’t a legal requirement.
However, there may be times when it becomes a necessity for your business to take out a public liability policy. For example, if you are a builder or a tradesman, your clients may insist on you having public liability insurance before hiring you.
Similarly, government and local authority contracts will usually require you to have public liability insurance in place.
Certain trade associations, professional organisations and regulatory bodies may also need you to prove you have public liability insurance as a condition of their membership.
Who needs public liability insurance?
There is an argument that most businesses should consider public liability insurance, since most businesses come into contact with the public in one form or another.
However, certain professions and businesses will more seriously need to consider public liability insurance than others. These include:
- any business that has a regular flow of customers and visitors, such as shops, barbers and hairdressers
- any profession that carries out work at client sites, such as plumbers and electricians
- any organisation that exhibits at public gatherings, such as fairs and markets
How much public liability insurance do I need?
There is no one answer to ‘how much public liability insurance do I need?’ The specific risk associated with your industry, the amount of contact you regularly have with third parties, and the scale of your business will help inform the size of your policy.
You should make sure that you get the right level of cover for your organisation. You don’t want to find yourself in a situation where your cover limit – i.e. the maximum amount your insurer will pay out in the event of an insurable claim – fails to pay for the costs of a claim made against your business.
Sometimes the amount of public liability insurance you need will be dictated by the job at hand. For example, government and local authority contracts typically require a public liability policy worth at least £5 million.
Can I work without public liability insurance?
Unless specified by your client or trade organisation, you can work without public liability insurance.
However, by doing so, you are leaving yourself exposed to paying 100% of the costs of a claim made against you if a third party is injured or, worse still, dies, or their property is lost or damaged, in the course of your business activities.
Why do I need public liability insurance?
There are a range of reasons why you should look into public liability insurance:
- Accidents happen, especially when the public are involved. Public liability insurance can help mitigate the costs of a successful claim made against you if a third party is injured or dies, or their property is lost or damaged.
- It shows your clients, customers and visitors that you take their safety very seriously.
- Certain clients and professional bodies may insist that you have a public liability policy in place.
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Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more