Public Liability Cover – What Is It & What Does It Do?

Public liability insurance provides protection for businesses and organisations against legal claims arising from injury or other types of damages.

All types of accidents can arise when a business or organisation has a building or an event that is open to the public. For example, if someone should slip on a banana peel in a restaurant, that individual may be able to win a claim against the owners if the latter were negligent in any way.

With public liability cover, a business or organisation has financial protection for legal expenses and for possible compensation payments.

Who needs public liability insurance?

The law in the United Kingdom generally does not require that businesses have public liability insurance.

However, those businesses that are open to the public should have this type of protection. Some examples of these types of businesses include:

  • Restaurants
  • Nightclubs
  • Shops
  • Salons
  • Gyms & Health Clubs

Additionally, public liability insurance is highly advisable for workers in the trades and for event organisers. Even if your business is only an office that only meets with clients by appointment, such cover is generally a good idea for maximum protection.

What does public liability insurance cover?

The main reason for public liability insurance is to provide benefits in case of claims against your business regardless of whether the damages occur on your property or whether they occur elsewhere.

With this type of cover, you will not have to worry so much about running out of capital in case of a large claim. The insurance allows you to keep running your business as you have protection against such financial shocks.

We live in a highly litigious society when it is common for people to file legal claims whenever they believe they have a chance of making money.

How much cover do I need?

The amount of public liability insurance that any company will need depends on a variety of factors. Ultimately, it comes down to the amount of risk that your business poses and also the amount that you could possibly lose in a legal claim.

Larger companies will generally need more cover than smaller ones since they will generally have more opportunities for accidents and other problems occurring. One way to find out the proper range for your business is to see what other companies like yours are paying for public liability insurance.

The minimum policy will cover limits of indemnity of £1 million. Companies with higher risk including those that take on government contracts will need higher cover. For some government contracts, there may be minimum cover requirements of £5 million or £10 million in public liability insurance.

What to look for in a policy?

In addition to the cover limits, there are some other items to check for when comparing insurance policies:

  • Exceptions and exclusions – Make sure that your business has the rights types of cover. Some policies may exclude claims for certain types of activities. For example, the policy may not cover work done in dangerous situations like working on high buildings or poles.
  • Premiums – How much will you have to pay in regular payments?
  • Term – How long does the policy provide you with cover?

Remember that the lowest quotes may not mean much if the policy only provides weak cover for your business. Check the details clearly and ask questions of the agent if there is anything that is unclear.

Finding public liability insurance

Many different companies offer these types of policies and consumers should shop around and compare before making a decision on a particular product. Many Internet websites provide comparison services that will allow you to check different policies side-by-side.

At these sites, you will usually be able to sort and filter quotes based on specific criteria that you choose. In general, it is good to do some research on the company before choosing a policy. Comparison sites will often offer customer reviews and ratings for different insurance plans.

Some sites also provide their own ratings and reviews but it is a good idea to watch out for conflict of interest in these cases. Make sure that the company reviewing an insurance provider does not have the latter as a sponsor or advertiser

Additionally, you can ask people in your personal network like family, friends and co-workers whether they can recommend a good public liability insurance plan.


Public liability insurance is advisable for businesses that are open to the public including shops, restaurants, pubs and salons. With this type of cover, the company has protection against any injury or other damage claims that may occur in connection with the business.

The insurance provides financial resources to cover claims that could otherwise cause hardship on your business. While generally not required by law, most businesses would still do well to have such protection.

Protecting Professionals With Professional Indemnity Insurance

Professional indemnity insurance is designed to protect professionals from lawsuits arising from negligence. It is primarily utilised by brokers, insurance agents, and other workers in the business of providing financial or medical advice. As you can imagine, these careers are at an increased risk for lawsuits given the speculative nature of financial and medical consulting.

What Does Professional Indemnity Insurance Cover?

Any business that provides advice or offers a professional service to other businesses should contemplate taking out professional indemnity insurance. If your advice is proven negligent, a client could potentially sue your business for their loss.

While accountants and brokers who advise customers on financial investments are the most obvious example, professional indemnity insurance applies to a wide array of professions.

For example, if an architect makes a mistake on a construction project that is already underway, it may result in having to tear down and reconstruct the building, which could result in millions being lost in both materials and time. Moreover, if an employee accidentally sends out an email with a client’s personal intellectual property or company secrets, then you could be held liable for the damages that result. Generally, you will need professional indemnity insurance if you meet one of the following criteria:

  • You provide advice to a client
  • You are given access to a client’s intellectual property
  • Provide any professional service that could be challenged with regard to quality

What Does Professional Indemnity Insurance Cover?

Any financial losses suffered by the claimant will be covered by the insurance policy. In addition, whatever legal fees arising from having to fight the claim will also be covered under a typical indemnity plan. Indemnity insurance will not cover the cost of the excess as well as any loss of reputation resulting from the dispute.

Details to Watch Over When Buying Professional Indemnity Insurance

With any insurance purchase, it is important to thoroughly examine the policy and insure you are covered for the scenarios for which you are at risk. Talk with an agent if you have any further questions. The following are some things to keep in mind when purchasing professional indemnity insurance:

  • Look for any exclusions on the policy before purchasing. Some policies are extremely cheap because they are not as comprehensive. On the flip side, others may provide superfluous coverage and charge extra as a result. Find a policy that suits the needs of you as a professional.
  • Ask your clients what level of cover they expect. Some clients will not work with a professional who does meet their requirement of indemnity protection.
  • Make sure the policy includes cover for legal fees and expenses.

Types of Cover

Most insurance companies will offer multiple levels of cover to choose from, ranging from £50k up to £5 million. The amount you require will depend on your level of risk. For instance, a financial adviser that has corporate clients will opt for a higher level policy than an individual who serves local families. Often times professional indemnity insurance will be bundled together with a larger business insurance policy for additional savings.

Online Comparison Sites

For most brokers and insurance providers, purchasing professional indemnity insurance can require a mountain of paperwork. This can be a source of frustration for many professionals who want to buy a policy without the hassle of having to do extensive research. However, online comparison sites offer a simple and easy way to purchase stand-alone insurance while still performing the diligence required to get a decent quote.

Dealing With Public Liability Insurance Claims

You have finally made your dream of owning your own business a reality. You have the location, tools, expertise, business plan and even advertising flowing well. Then disaster strikes: A customer is suing you for medical expenses, pain and suffering after a slip-and-fall outside your door last winter. One thing any business owner, especially a new business owner with tight finances, can afford is a liability suit that can drain money, time and effort from running an operation and making a profit. Obtaining a well-rounded public liability insurance policy could have greatly diverted the financial, physical, mental and emotional drain if only the business owner would have thought it was important.

What is Public Liability Insurance?

Literally, public liability cover protects your business against valid liability claims of negligence against your business or you. Differing from worker liability, for example, public liability insurance protects your business against acts or events to the public — not you, not your employees or contractors but your potential or actual customers or anyone not associated with your business who might have simply been walking by the building in the above scenario.

This business cover protects against both personal injury and property damage. For example, property damage can occur if:

  • Your business sign falls and damages a bicycle, car or shopping cart.
  • Someone does slip on your property, and goods crash through your window.
  • Another member of the public accidentally bumps into the hapless victim, and that person slides into a display, causing goods to cascade onto either or both persons or their property.

Why Is Public Liability Insurance Important?

Few businesses carve into operating budgets anywhere from thousands to millions of pounds earmarked specifically for legal expenses and damage pay-outs. The cost of public liability insurance can justify itself the first time someone files a claim against your business. The peace of mind that comes with a valid, comprehensive public liability cover is worthwhile, for the financial safeguard is worth its weight in gold.

What Determines Public Liability Insurance Costs?

As a business owner, cost is an important factor to consider when searching for reliable protection. As with all types of insurance, certain public liability cover cost factors are common with auto insurance, home owner insurance and even life insurance. Some common factors include:

  • Geography: Your business address will play a large part in your premium amounts, just as it does with renter’s or auto insurance.
  • Business type: The more inherently dangerous your business might be to the health of the public and to property, the more your premiums will probably cost. Auto repair shops with lifts and pits, for example, would be more expensive than a white-collar business, for there is greater risk of injury.
  • Business size: Larger businesses have a greater risk of being sued for injuries and damage than smaller ones. Therefore, your potential liability is greater, and so might your estimated premiums be. Profitable businesses seem to answer to more liability suits than less profitable, so size can transmute from physical square footage into the size of the business profits.
  • Employee numbers: Like the business size, the more employees you have, the greater the possibility of creating even accidental hazards to the general public. Your staff size will be computed into your public liability cover costs as well.
  • Claims history: Identical in both concept and application to auto insurance, the number of prior claims against your business determines part of its safety history, and large claim numbers, however justified or not, can upwardly influence your public liability insurance premium costs.


When safeguarding your business’ financial health, few business owners can afford to ignore the protection afforded by a solid public liability insurance plan. Include this important expense in your start-up costs to help strengthen your business’ long-term chances of success and to avoid the pitfall of a personal expense that may otherwise cost you everything.