What should I know about Public Liability?
Public Liability cover is a popular insurance policy taken out for businesses of all sizes. Most businesses should have it – but what is it? What is included?
A Public Liability policy covers your legal liability if a member of the public suffers the following as a result of your business:
- Personal injury
- Damage to their property
- Even accidental death
Following a valid claim, your insurance covers both the legal fees and compensation up to your limit of indemnity. Typical indemnity limits range from £1m to £5m. We recommend you ensure cover is sufficient for your specific business activities. Similarly, check with your local authorities if there is a Public Liability requirement for businesses.
Bodily Injury Claims under public liability
As a business owner, you have a duty of care to members of the public to make sure your premises are safe when they visit. However, even with extensive risk management, accidents can still happen. While these are often minor, they can result in costly compensation claims.
A common Public Liability claim is an injury caused by slips, trips and falls. Tripping hazards and wet floors caused by spillage are often easy to overlook as they can appear suddenly. For instance, you run a coffee shop, and a customer has spilt a drink on the tiled floor without your noticing. Another customer comes along and slips on that wet floor and fractures their knee. The injured customer is self-employed and, as a result of their injury, is unable to work for several weeks.
The customer makes a claim against you for their loss of earnings. As you have adequate Public Liability cover, your policy responds and covers both the legal costs and compensation.
Disease & Illness Claims under public liability
Public liability and product liability claims for illness usually relate to two types of incidents.
1) Illness caused by any food or refreshments you have provided for customers
2) Illness caused by environmental hazards on your property. For example, waste leakage.
Similar to bodily injury, you have a duty of care to ensure your premises are sanitary and any food products are stored correctly. If you are found to have breached this duty of care, you will almost always be found liable for damages.
For example, you are catering for a party of over one hundred people. The hot soup container falls from a table onto four guests causing burns as well as injuring the leg of one attendee.
Claims of Damage to Property under public liability
Property damage claims can come in for a variety of reasons. If you visit clients at their homes or offices, there is a risk of damage.
For example, your business sell, deliver and install TVs in offices. While installing a wall-mounted TV, one of your employee’s drills through a pipe. With Public Liability Accidental Damage cover, you can save your business from the cost of repairs.
Similarly, property damage can occur on your site. For instance, you run a salon, and a client comes in with an expensive designer coat. As usual, one of your employees takes the coat into the cloakroom.
However, on its journey, some stray hair dye damages the coat. Due to the unique pattern on the coat, repairs are impossible, and the client makes a claim against your business for the replacement cost of the coat. Overall, the claim exceeds £4,000 with legal fees.
Accidental Death Claims under public liability
Depending on your industry, this risk goes from one in a million to quite possible without due care. In the worst-case scenario, financial compensation claims can be huge.
Take the example of a customer slipping on a wet floor and fracturing their knee. The same customer could have also hit their head. Or, if the spillage had been near a flight of stairs, fallen a considerable height. This is why your Public Liability insurance policy will include cover for accidental death as standard.
Is Public Liability Cover a legal requirement?
While Public Liability insurance is not a legal requirement, it may be a contractual requirement.
Examples of cases where you will likely be asked for proof of PL cover include:
- You are hiring a venue to host an event – the owner will likely require you to have PL cover before the event
- You are going to be carrying out building or repair works – whether for a local authority or private company
- Your commercial landlord requires it
What will Public Liability not cover?
Employers Liability Insurance
Public liability insurance will not cover you if any of these things happen to an employee. Instead, you will need Employers Liability insurance. Employers Liability insurance is required in the UK for many businesses that have employees.
However, there is an exception if your employees are exclusively immediate family members to the business owner.
For instance, you run a small business, and the only people that work there are you and your children. However, your children are not shareholders and therefore are employees. If you have any questions about these exemptions, do not hesitate to ask our expert team when taking out cover.
Products Liability Cover
Often Product Liability Insurance will come as standard with your Public Liability Insurance. Product Liability exclusively concerns damages caused by products you have supplied. This can apply to products you have manufactured, designed, sold or given away as a gift.
For example, you run an e-commerce business selling biking equipment. One of your products is faulty and causes an accident. Under your Products cover, you are covered for both legal costs and the cost of compensation.
Professional Indemnity Insurance
Finally, another type of business liability cover you should consider is Professional Indemnity.
PI insurance is different as it is specifically for the work you carry out. For example, you provide designs or advice for another business.
As an expert in your field, you are considered to have a heightened duty of care to your client. As a result, you are liable for any financial losses that result from your faulty advice. Any sort of advisors, designers, consultants, agencies or contractors should consider PI cover.
How much does Public Liability cover cost?
As with all insurance, the cost of cover will depend entirely on your activities. Factors that will influence your premium include your claims history, the level of risk involved and the size of your operation.
Insync can compare Public Liability Insurance from a panel of leading insurers. Book your free review with the link below.