Understanding public liability insurance

In its most basic terms, public liability insurance protects you against claims made by those who have suffered personal injury, or damage to property, in relation to your business activities. This can happen either at your own premises or outside of them; for example, if you're a tradesman and accidentally damage a client's property, or if a customer injures themselves in your shop.

Taking out public liability insurance cover is also about more than simply protecting yourself and your business: prospective clients can often require proof of your insurance policy before engaging you in a contract. This is particularly the case with large organisations such as construction companies, housing associations or local authorities.

Other related insurance products

Product liability
If you're running a production business – in other words building, making or supplying products of any kind to customers – then this insurance provides cover if someone tries to sue you after they are injured, or have their property damaged, by something that you've supplied.

Property owners’ liability
This insurance covers you against accident or injury caused to someone else while they are on your property. Depending on the type of business that you run, and any other cover that you have already taken out, this might already be part of one of your other policies; but check carefully, as it can provide valuable protection.

Taking out public liability insurance

It's quick and easy to find quotes for public liability insurance on the internet.

Many companies also roll public liability cover into catch-all business packages. Direct Line, for example, automatically includes public liability cover in all its business-insurance products, with the exception of its van policies. So if you already have some sort of business insurance, check your policy thoroughly, as you might already be covered.

Ensure that your cover suits you

Before signing up to an insurance policy it's vital - as with any insurance - to read the policy documents carefully to make sure that your cover suits the needs of your business. Do you work with high-powered tools or other dangerous machinery? Are you likely to be operating in private homes while the occupants are present? Will you or your employees be working at heights greater than 10 metres? Does your business involve work in places with lots of other people present, such as in a park or school? Any of these higher-risk situations could be excluded from your cover, so check your policy carefully.

Employers' liability insurance

Although it's highly advisable to take out public liability insurance - particularly if you're a tradesman or retail seller - it's not required by law. But if you have any employees, it is compulsory to be covered by employers' liability insurance.

This protects you from claims made by your employees for illness or injury caused in the course of working for you; it also covers any legal expenses in cases taken against you by employees.

it's also a legal requirement for limited companies to have at least £5million of cover (and you can be fined up to £2,500 for every day that you operate without cover).