What does public liability insurance cover?
A public liability policy covers the cost of claims brought against you by third parties - anyone who is not an employee - along with associated legal costs. Cover typically extends to the following:
Compensation claims
If a customer, client, or member of the public injures themselves or has their property damaged as a result of your business activities - whether on your premises or off-site - they may make a compensation claim against you. These claims can run into the thousands of pounds. Public liability insurance covers the cost of the claim up to your selected limit. This includes incidents such as a customer slipping on your premises, or accidental damage to a client's property while you are working at their site.
Legal costs
If a compensation claim is taken to court, the legal fees involved can be substantial. Public liability insurance covers the cost of any legal proceedings brought against you or your business.
Repair and replacement costs
If you or one of your employees damages property belonging to a third party - for example, breaking a window or damaging a carpet while carrying out work at a client's premises - you will be expected to cover the cost of repairs or replacements. Public liability insurance covers these costs.
Medical costs
If a client or member of the public is injured or taken ill at your premises as a direct result of your business activities, the NHS may make a claim against your business to recover the cost of treatment or an ambulance call-out. Public liability insurance covers the cost of any such claims.
What is not covered by public liability insurance?
Public liability insurance covers claims made against you by third parties, but it does not cover everything. It does not cover accidents that injure you or your employees, damage to your own business property, professional errors or negligence (which requires professional indemnity cover), or deliberate acts. Claims made by employees are handled separately under employers' liability insurance, which is a legal requirement for any business with staff.
Do I need public liability insurance?
Public liability insurance is not a legal requirement in the UK for most businesses. However, there are several situations where you will effectively need it.
Many clients - particularly in construction, events, and the public sector - require contractors and suppliers to hold it before they can work on a contract. Trade bodies and professional associations often require it as a condition of membership. And if you work directly with customers or members of the public, the financial risk of operating without cover can be significant.
Professions that commonly need public liability insurance include builders, plumbers, electricians, carpenters, cleaners, gardeners, and hairdressers, among many others. It is also relevant for freelancers and self-employed workers - if a claim is made against you and you are not covered, you will have to meet the cost yourself.
How much public liability cover do I need?
Public liability cover is typically available at levels of £1 million, £2 million, £5 million, and £10 million. The right level depends on your industry, the types of contracts you take on, and any specific requirements from clients or trade bodies. Higher-risk trades, or those working on large public-sector contracts, will generally need higher limits. A small office-based business will typically require less cover than a labour-intensive trade working on client premises with heavy equipment.
How much does public liability insurance cost?
Premiums vary depending on several factors: the size and nature of your business, where your workplace is located or where your staff work, your claims history, and the level of cover you select. Businesses that involve a lot of off-site work or the use of heavy equipment are generally considered higher risk by insurers and will pay more accordingly.
If your business has made previous public liability claims, you may also be offered higher premiums. Comparing quotes is the most reliable way to understand what you should expect to pay for your specific circumstances.
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Public liability insurance frequently asked questions
Is public liability insurance the same as employers' liability insurance?
No. Public liability covers claims from members of the public, clients, and customers. Employers' liability covers claims from your own employees if they are injured or become ill as a result of their work. Employers' liability is a legal requirement if you have any staff; public liability is not legally required but is strongly recommended for most businesses.
Is public liability insurance a legal requirement?
Public liability insurance is not required by law in the UK for most businesses. However, depending on your industry, certain trade bodies, clients, or contracts may require you to hold a minimum level of cover. It is worth checking the requirements of any contracts you bid for and any trade associations you belong to.
Is public liability insurance tax deductible?
In most cases, yes. Business insurance premiums are generally treated as an allowable business expense, which means they can be deducted from your taxable profit. You should confirm this with an accountant or tax adviser, as individual circumstances vary.
Does public liability insurance cover work I do abroad?
This depends on your policy. Some policies include cover for work carried out overseas, while others are limited to the UK. If you regularly work internationally, make sure the policy you choose reflects that.
What is not covered by public liability insurance?
Public liability policies do not cover damage to your own property, claims by your employees, professional errors or negligence (which requires professional indemnity cover), or deliberate acts. Always read the policy wording carefully to understand any exclusions.
How much does public liability insurance cost for a small business?
Premiums vary significantly depending on your trade, turnover, level of cover, and claims history. A sole trader in a lower-risk profession may pay a relatively modest annual premium, while a contractor operating in higher-risk environments will typically pay more. Comparing quotes is the most reliable way to understand what you should expect to pay.
Do I need public liability insurance if I am self-employed?
Yes, in many cases. If you are self-employed and work with clients or members of the public, a compensation claim made against you would have to be met from your own funds if you are not insured. This could have a serious impact on your finances and your ability to continue trading. Public liability insurance is available to freelancers and self-employed workers as well as registered businesses.