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Does your business need public liability insurance?

Jade Wimbledon from insurance provider Simply Business helps you decide whether public liability cover is right for your business

When you’re deciding what insurance your business needs, you need to think about the type of work that you do and the risks your business faces. The law doesn’t require you to have public liability (PL) insurance, but it’s a cover that’s crucial to many businesses. Potential customers may also want to check whether you’ve got a policy in place.

If your business comes into contact with third parties – whether that’s on your premises, in the homes of your customers, or on the street – you should probably consider taking out a public liability policy. It’s an insurance that’s particularly popular with shops, tradesmen and salons, because it can cover compensation claims made against you for injury, or for damage to someone’s property.

‘Third party’ includes your customers, your clients, your suppliers, or any other member of the public who comes into contact with your business. For example if you run a hairdressing salon and a customer trips over a cable that’s trailing across the floor, they could sue you for the injury they’ve suffered. The compensation amount could take into account things like medical bills and lost income.  Alternatively, imagine that you’re working on a construction project and a parked car is damaged while you’re moving your equipment. The compensation amount would probably be based on the repair or replacement cost of the vehicle. Compensation payments can be high, and remember that you’ll also have to pay legal fees. Your public liability insurance would cover these costs, up to the limit of your policy.

If you’ve decided that you need public liability insurance, you need to choose a cover limit, which is the maximum amount your insurer will pay for a claim. The amount you choose should be based on the risks that your business faces, so it may help to think about the size of your projects and the extent of your contact with the public. You should also check your client contracts, as some will specify a particular level of cover. In particular, government contracts usually ask for at least £5 million of public liability cover.

To summarise, here are some of the things to consider when you’re deciding whether your business needs public liability insurance:

  • Does your business come into contact with customers or other members of the public?
  • Is there a chance that your business could cause injury to someone or damage to their property?
  • Do your client contracts ask for you to have public liability cover?
  • Are you a member of any trade bodies or professional associations that require public liability insurance?
  • Could a public liability policy help reassure your customers that you’re covered if anything goes wrong?


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