Finance · 4 February 2022

Does My Business Need Public Liability Insurance?

Does my business need Public Liability insurance?

Public Liability insurance is your safety net for protecting you against litigation from a customer or a member of the public, who is not a customer, for various claims, including injury caused to themselves and damage to their property or assets.

What size and type of company should buy Public Liability insurance?

Public Liability insurance will cover businesses of all shapes, sizes and ages. Here is a brief overview:

Start-ups – When you launch a new business, you generally want to be very financially savvy. If a client becomes sick or injured due to your product or your business’s actions (or non-action), you will be in a vulnerable position. Avoid a premature shutdown with insurance.

Small businesses – As a small business, you will still have people (the public, customers and non-customers) entering your business premises. Your Public Liability insurance will protect a small business against claims due to accidents on your premises, e.g. the classic ‘slip and trip’ claim.

Sole traders – As a sole trader, you may have the type of business that requires you to have in-person dealings with clients. Up-to-date Public Liability insurance will ensure that your personal assets are not threatened by injury or property damage claims.

Limited companies – A limited company is most definitely responsible for its clients relating to negligence. Public Liability insurance will protect your bottom line in the case of negligence claims, even if such a claim is against your employees.

Public Liability insurance definition

Public Liability is one of the first insurances taken out by companies. In summary, it protects you from litigation relating to your business and employees’ responsibilities to clients and the public.

Regardless of the business model, any business is recommended to have this insurance in place, especially for sole traders, as the latter business model exposes you to greater personal risk. Accidents happen ‒ that is part of life. However, accidents, injury, asset damage or personal injury that happen when linked to your business will be covered by Public Liability insurance.

There’s a sub-section of Public Liability insurance that is called Products Liability. This would be helpful protection if your business reconditions products or puts them into new packaging before selling them onwards.

Public Liability insurance can also be extended to include Employer’s Liability insurance.

What is excluded from Public Liability cover?

Public Liability is insurance for businesses and thus does not cover your personal property or injuries you have personally incurred. The cover is explicitly for covering third parties.

Even if you have chosen the business model of “sole trader”, are self-employed, or are a freelancer, this insurance will not cover you personally. You must seek out an additional policy for Personal Accident Insurance.

In addition, your personal loss is not covered. For example, destruction, theft or loss of your personal tools, personal purchases in storage at home or away from your property, and other personal assets (like furniture) are not covered by Public or Product Liability cover. You can ask for it to be added, but it is not an automatic inclusion.

What is the cost of Public Liability Insurance?

A Public Liability insurance policy must be customised to your business’s needs. You will need to submit information such as:

  • Type of products sold
  • Number of employees
  • Geographic location of the business
  • Trading hours

Other insurances for businesses

Public Liability is not the only insurance you should research and purchase. The variety and degree of business insurance you should acquire will be subject to various factors, for example:

  • The type of business
  • The location of the business
  • The assets held by the company
  • The annual turnover
  • The number of employees

Employers Liability insurance

From the first moment you hire an employee, you are legally required to acquire Employees Liability insurance. This can be added as a sub-section to a Public Liability policy.

Even if your business model is “sole trader”, you will require Employer’s Liability cover if you hire an employee, regardless of their work category.

The staff of your company are your, and the company’s, responsibility. If employees incur loss, damage or injury, they have the legal right to claim against your insurance. Your cover will pay for legal costs and the claim amount.

NOTE: Should there be any hint of bullying an employee into not claiming, there are serious legal ramifications attached to this.

Company Vehicle Insurance

If your company relies on vehicles, vans or lorries to operate, they must have appropriate insurance cover. The loss of income due to damaged business-critical vehicles will easily cost you more than an insurance policy.

Commercial Property Insurance

If your business owns the property that it operates out of, or earns income from one, then it should be covered as well as its fixtures. Some properties, like fuel depots, have to insure a radius of properties around them as well.

Professional Indemnity insurance

This is an important insurance to have in your portfolio if you give advice or certify things, e.g. an architect or engineer.

You are covered if your advice or instruction has caused loss or damages to a client.

NOTE: You are not covered for doing a poor job or substandard workmanship. If you follow current published standards and something fails, then you are covered.

Product Liability insurance 

If the product you manufacture, have installed, maintained or served (e.g. food) makes a person ill or causes damage to them or their property, this insurance covers you. If you are a repairman, you should consider Professional Indemnity and Product Liability cover.

Cyber Security insurance 

This is a growing field of insurance, and the number of security breaches and legal responsibilities continues to grow. If customer data passes through your business portal or server or you have an online business, you need this insurance. It covers damage from cyber-attacks or security breaches that result in data being stolen.


 
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