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Does My Shop Need Public Liability Insurance?

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Public liability insurance is needed in a shop, despite not being a legal requirement. Public liability is one of the biggest sources of compensation claims in the UK, second only to motoring claims. So it is no wonder it is one of the most popular forms of business insurance. If a business comes into contact with the public then public liability insurance is essential to protect the trader from any accident. They may be the most diligent worker, but they simply cannot control what a member of the public is going to do.

Shops are particularly vulnerable to a public liability claim. There are people walking in and out of the premises all day, and when people are distracted or in unfamiliar territory, accidents are more likely to happen.

For business owners still unconvinced on public liability insurance, these statistics may give pause for thought. Despite coronavirus closing many public places down in 2020, there were still 51,286 public liability claims made in the UK. In 2019, when coronavirus was not a threat, there were more than 72,000 claims, and 85,000 the year before that, according to the government’s Compensation Recovery Unit. Claims settled in 2020 were worth £7.7 million.

Most public liability insurance policies offer cover up to £5 million which may seem like a lot, but with payments – as well as legal costs – often running into the tens of thousands of pounds, this could be a valuable lifeline if there were multiple casualties in an incident. Or if there was one very seriously injured third party. Shopkeepers must remember they are responsible for the welfare of anyone entering their premises.

Other types of insurance a shop may need:

  • Employers’ liability insurance: Almost always legally required to cover workers in case of injury or illness due to working for the business.
  • Commercial contents insurance: To protect fixtures, fittings, stock and other items within the premises from fire, flood, storm or theft.
  • Business equipment insurance: For equipment needed to do the job such as computers and cash registers, or tools needed to carry out the service.
  • Personal accident protection: Useful for the business owner in case injury means they cannot work and earn money. Critical illness cover is similar but pays a lump sum if a serious illness is diagnosed.
  • Business interruption insurance: If fire, flood, theft, storm etc. means the business cannot operate, this will reimburse lost revenue.
  • Commercial buildings cover: Essential if you own the building, but not required if a tenant, this protects the structure of the building from fire, flood, storm etc.

What does public liability insurance cover?

Public liability insurance covers claims from members of the public who are injured or have property damaged and the policy holder is blamed. It provides funds to defend or mitigate a claim – such as with legal representation – and compensation/damages awarded. Claimants are not necessarily customers, but can be any third party including suppliers, tradesmen, vendors or passers by.

Examples where public liability insurance would apply:

  1. A customer tripped over a box of stock that was being stacked on a shelf and they broke their leg, meaning they had to take time off work. Public liability insurance would fund legal expenses to defend against the claim and any damages, such as medical bills and the claimant’s loss of income.
  2. A supplier is showing the shop owner a range of new products on their laptop when the shop owner spills coffee on the keyboard. Public liability insurance could be used to pay the cost of replacing or fixing the laptop.
  3. A member of the public claims they were served undercooked food that gave them food poisoning, forcing them to take time off work. Public and product liability insurance would pay for the legal defence and any compensation awarded.

Product liability is similar to public liability insurance but it covers damage or injury caused by a product the shop sells. Sometimes this is included within a public liability policy, although all providers vary.

Another example of a product liability insurance claim:

  • A mobile phone power bank sold by the shop malfunctions and breaks the phone. Product liability insurance could pay for the cost of repairing or replacing the phone, plus the cost of the power bank itself.

Public liability risks in a shop

There are a number of public liability risks in a shop. Obstructions being left out on the shop floor could cause a customer to trip, as can poorly maintained flooring, or spillages or wet flooring which causes a slip or fall risk.

Items not being stacked correctly, or falling display items could cause injury or damage. And depending on what the shop sells, there could be hazardous chemicals or sharp objects on site and within easy reach.

Other hazards include issues outside the building, such as a falling sign in poor weather.

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