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.