Do I Need Public Liability Insurance?

In Short

• Public liability insurance protects your business if a member of the public is injured or their property is damaged because of your activities.

• It is not usually a legal requirement, but many clients and contracts expect you to have it in place.

• It is especially important for customer-facing businesses, trades, public events and work in public spaces.

Tips for Businesses

Think about how often your business interacts with the public and where your work takes place. Check client contracts for insurance requirements and assess the level of risk in your activities. Review your cover regularly as your business grows, and consider using a broker to help you choose suitable protection.

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Table of Contents

• The Value of Insurance Policies and Protection From Risk
• Understanding Public Liability Insurance
• Do I Need Public Liability Insurance?
• Contractual and Industry Expectations
• Obtaining Insurance Cover For Your Business
• Key Takeaways
• Frequently Asked Questions

Running a business can involve a range of risks, particularly when your work brings you into contact with members of the public and exposes them to hazards.  Businesses can be held responsible if their activities cause injury, death, or damage to third-party property. Public liability insurance is a key risk management tool that helps protect a business by covering claims from members of the public for injuries, deaths, or property damage arising from business activities. 

Having public liability insurance can help a business manage the risks that come up in everyday activities. Many businesses secure this insurance to help them operate smoothly and reassure third parties about their risk-prevention measures.

This article explores the importance of public liability insurance, its benefits for day-to-day risk management and the key issues businesses should understand when taking out cover.

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The Value of Insurance Policies and Protection From Risk

Commercial businesses face several risks and financial liabilities when trading, and insurance is a key tool for managing them. Put simply, business insurance provides financial protection when a covered loss occurs.

The type of insurance cover you will need depends on:

• your work; 
• your industry; and 
• how often you deal with the public. 

A number of policies are legally required in certain circumstances, such as employers’ liability insurance. However, a much wider range of insurance policies is often taken out for risk mitigation. 

As your business grows or changes over time, your risks may change too, so it is sensible to review your policies periodically. If you are unsure which type of insurance you require, an insurance broker can help you identify your risks and suggest the right insurance for your business.

Insurance can also affect the way you do business and who you can work with. Many clients will request to see proof of your insurance policy before agreeing to work with you, and some contracts will only proceed if you hold certain levels of cover. Implementing appropriate insurance from the outset can therefore improve your commercial standing and professionalism.

Understanding Public Liability Insurance

Public liability insurance is a type of insurance that protects businesses (and sometimes individuals) against claims made by a third party, as a result of injury, death or damage to their property in connection with the business. These claims are usually triggered by negligence. Policies generally apply to incidents that happen both on your premises and off-site, such as at client locations or at events and activities you organise. 

This type of insurance typically covers:

• legal fees; 
• compensation payments; and 
• the cost of repairing or replacing damaged items. 

Unlike employers’ liability insurance, public liability insurance is not usually a legal requirement (though it is for a horse riding establishment). However, it is common for businesses to choose to have this cover to protect themselves against claims that could arise when trading.

Do I Need Public Liability Insurance?

Whether you need public liability insurance depends heavily on how you work in practice. It can be vital if you run a business that customers visit or organise events and activities attended by the public.

Businesses often need public liability insurance when their activities involve regular contact with the public. Claims can arise quickly and without warning, for example, a customer might trip in your shop, or something at an event you host could accidentally injure a member of the public. Public liability insurance can help you deal with these situations by covering legal costs and compensation.

You should consider getting public liability insurance if you:

• operate customer-facing premises such as retailers, hair and beauty salons, cafes, or restaurants;
• provide trades or services that operate in client homes or on client property, like builders, electricians, decorators, or gardeners;
• work in public spaces, including construction or maintenance services, where there is a higher risk of incidents involving passers-by; and/or
• host events, workshops, or public activities, as you take on responsibility for the safety of participants and spectators.

The level of cover you will need depends on your industry and the nature of your work. Higher-risk activities often require higher levels of protection, and some clients may specify minimum requirements.

Contractual and Industry Expectations

Many organisations will only work with you if you hold public liability insurance. This requirement is often set out in contracts, particularly in the construction, retail, events and hospitality industries. Even where it is not compulsory, public liability insurance is widely regarded as good business practice.

Obtaining Insurance Cover For Your Business

Businesses may obtain public liability insurance directly from an insurer or through a specialist broker. Brokers can help compare policies and select cover that reflects a business’s risk profile. Insurers will typically assess factors such as the nature of the business, the level of public interaction and the organisation’s claims history when determining premiums applicable for the cover. 

When assessing public liability insurance needs, you should consider:

• the environments in which you operate; 
• the extent of your public contact; and 
• any contractual obligations which are relevant. 

The cover should be reviewed periodically, particularly if operations expand or diversify, to ensure the policy remains appropriate and effective enough to protect you.

Public liability insurance can be purchased as a standalone policy or as part of a combined liability package. Insurers will usually explain:

• the policy’s coverage;
• the limits of protection;
• the period of cover; and
• the wording that defines what is included, excluded, or subject to conditions and endorsements.

Key Takeaways

Public liability insurance is a form of insurance cover that can protect businesses against claims made by members of the public alleging injury, death or damage to their property in connection with the business’s activities. Although not usually required by law, it is strongly advisable for businesses that interact with the public or operate in environments where accidents can occur to gain protection. 

Having this type of insurance can:  

• strengthen business financial resilience; 
• support contractual compliance; and 
• improve credibility. 

If you need help in deciding whether your business needs insurance, contact our experienced regulatory lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page. 

Frequently Asked Questions