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What Does Public Liability Insurance Mean?


Public liability insurance is legal and financial protection against claims made by a third party who has been injured or has property damaged where the policyholder is held accountable.

While policies do vary, they usually cover incidents both on the business premises and off-site, such as events, or if work is carried out away from the business address.

The insurance policy covers legal costs, compensation payments, medical bills and repair costs related to bodily injury, property damage and wrongful arrest. Even if a business is not found to be culpable, it will still need to fund legal assistance to defend against a claim.

The key word is ‘public’. This type of insurance does not offer protection against injury of employees, temporary staff, students or people on work placements. This is covered under employers’ liability. However, public liability does protect against injury or damage to property of customers, clients, vendors, suppliers, and even other contractors hired by the business, such as a cleaner, landlord, or passer-by.

Businesses can get quotes for public liability insurance at NimbleFins, as well as learn about average costs for a policy, how coverage works and who needs it.

Public liability insurance definition

Public liability is where a business or person is held responsible by law for a third party’s injury or damage to their property. In this sense, public refers to any member of the public not working for the policyholder. This could be a customer, a supplier, vendor, cleaner, landlord, or simply a passer-by.

Therefore public liability insurance is the financial protection against any sort of public liability claim made against a business.

Who needs public liability insurance?

Any business that comes face to face with the public or their property needs public liability insurance. As mentioned above, this stretches further than just customers, and businesses need to consider which other members of the public they may face in their trade.

Any contact with the public or their property brings some risk of accident or negligence, which could lead to financial loss in the form of legal fees or compensation.

Businesses that are strongly advised to take out public liability insurance are:

  • Organisations that have visits from customers at their business premises such as a pub, café, shop, beauty salon, hairdressers.
  • Businesses that work in or on people’s homes, such as electricians, plumbers, window fitters, builders and other tradesmen.
  • Businesses that operate in public, such as scaffolders, construction workers, painters, sports instructors.

It may not be that a business necessarily deals with customers in person, but the nature of its work means that employees do come into contact with third parties. For example, a cake-making business may only take orders online or by telephone. Still, when delivering their goods, an employee could damage a customer’s property or could be accused of a food poisoning incident (that would fall under product liability, which is also wrapped up with public liability).

A dog walker may enter their client’s homes to collect the pet while their client is away from home, but there is still a public liability risk if, for example, a dog bites a passer-by in the park or causes a fellow walker to fall.

Public liability insurance is not a legal requirement, apart from horse riding businesses, but there are instances where it is required to carry out work effectively.

Some trades require public liability insurance to be part of an industry body.

The Electrical Contractors’ Association (ECA) requires a minimum cover of £2 million in public liability insurance. The Association of Plumbing and Heating Contractors Limited (APHC) also requires public liability insurance with £2 million of cover against plumbing, heating and mechanical services. As well as employer’s liability insurance and professional indemnity insurance.

Some clients require a business has public liability insurance before agreeing to work with them.

There were more than 72,000 public liability claims made in the UK in 2019/20, according to the Government’s Compensation Recovery Unit. There was £6.641 million paid out in compensation, according to the figures. With payments and legal costs – often running into the tens of thousands of pounds, businesses at risk of claims are wise to consider public liability insurance.

How to get a public liability insurance certificate

Once a business has agreed and paid for its public liability insurance, it can request a certificate from its provider. Unlike employers’ liability insurance, it is not a legal requirement for a business to display its public liability insurance certificate but is often advised to show compliance and protection.

If a client requests a certificate, the business must first make sure they are aware of the client’s minimum requirement. Then the business can check it is covered for that amount. If not, the business may need to increase coverage. It may be that this can be done for just this one-off project while maintaining the lower limit for the rest of the business’s work, although this may differ between insurance providers. Once the premium is up to date, request the certificate from the provider, listing all coverages.

How to check if a company has public liability insurance

Because there is no legal requirement to hold public liability insurance, there is no public database showing which businesses have coverage. It is a case of asking the organisation for a certificate and calling the provider up to check this is up to date and accurate. The certificate will have the policy number on it, which can be cross-referenced with the provider. Ideally, this should be done before work begins but can be requested at any time.

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