A guide for public liability insurance for businesses
Public liability insurance provides protection for your business in the event that someone is injured or their property is damaged while on your premises or because of your actions when seeing them on another site.
No business is 100% secure against the risk of causing injury or damage to property – it could be something as simple as spilling a cup of hot coffee over a customer's new carpet, or a visitor to your office tripping over a trailing electric cable.
When can a business be held liable?
Under the law, you have to take care that anyone visiting your premises or meeting with you is not exposed to unnecessary risk. You will only be found to be negligent if the risk is judged to be reasonably foreseeable – that is, it could have been predicted or is due to you being irresponsible. A lawyer would look for evidence such as testing of equipment, risk assessments and staff training records to show whether you were meeting your responsibilities.
In some circumstances, other regulations will apply to your business. For instance, specific rules apply to avoiding the risk of people slipping or tripping in premises open to the public. A lawyer will be able to advise you of the specific rules that apply to your business.
The cost of a claim against you
If someone claims your business is liable for their injury, they are likely to seek compensation for their distress and inconvenience and costs such as unpaid time off work, physiotherapy and care fees, as well as legal costs.
It is difficult to predict how much a claim for injury will be worth, because it depends on the circumstances of the individual who is injured. If a professional footballer trips in your premises and the injury means they are unable to pursue their career further, you could be asked to pay a proportion of the salary they could have earned in the premier league.
Even if the average claim is not likely to reach millionaire footballer proportions, it can still easily run into thousands or tens of thousands of pounds, which most small businesses would struggle to afford.
Is public liability insurance a legal requirement?
Public liability insurance is not required by law, but you may find your ability to operate as a business is restricted without it. For example, some contract tender processes or business loan companies are likely to require it as a condition of partnering with them.
Even if you do all you can to reduce your risk to a minimum, it is still a good idea to protect yourself by taking out public liability insurance. If someone brings a claim against you and you are faultless, it will still take up valuable time - and possibly involve legal fees – to defend yourself.
What does public liability insurance cover?
Public liability insurance provides cover for compensation claims due to injury or damage to property, legal expenses, the cost of repairing damage to a third party's property and other expenses such as hospital fees. Most small to medium businesses will require cover of between one and ten million pounds, depending on their individual risk level.
It is important to note that, as with any insurance policy, certain exclusions and conditions apply. Policyholders will be expected to act responsibly in avoiding risk and maintaining their premises and equipment, for example. If you are aware of a hazard such as a rotten floorboard in your premises and do nothing about it, your insurer may refuse to provide cover.
What is not covered by public liability insurance?
Almost all insurance policies will be subject to an excess, meaning you pay the first £250, £500 or other sum of a claim against you. The higher the excess level, the cheaper your premium is likely to be, but you must be confident that you can afford to pay whatever excess is agreed.
Public liability insurance is not intended to cover you, your employees or your premises and equipment, as these should be covered by other policies such as employer's liability insurance, buildings insurance or contents insurance.
Is your business protected against public liability claims? Why not talk to Stride Insurance about finding a policy that is right for you?