What is Public Liability Insurance and What Does it Cover?

So you run your business from home. Congratulations. You get to fire up the laptop from the comfy bosom of your sofa. Delightfully, you can work in your PJs with a cat in your in-tray. You can start late, finish early, or work at 3 am if you like. Then you can even take an afternoon nap. Just so long as you hit your deadlines.

Surely there must be some flies in this rather alluring ointment? Well, possibly. One of those possibilities is insurance.Yes, we know you’re not a multinational conglomerate with offices in Dubai, London and Sydney (although congratulations if you are), but you just might need to take out public liability insurance.

What is public liability insurance?

Let’s imagine you’ve invited a new client over to your place to discuss an exciting project. While preparing a coffee in the kitchen, you’ve managed to get super-chocca-mocha-latte all over the tiled floor. Your client walks in and goes head over heels. He breaks a rib, damages his knee and has to take three months off from work.

Alternatively, he might leave his laptop right next to your crackling open fire. (Let’s assume he’s very stupid.) The computer might melt, along with all the vital business data it contained. That could have a value way beyond the few hundred pounds he paid for the laptop. You could argue it was his own fault, but you might be responsible for replacing it.

Then there’s the case of delivery drivers. Many insurance claims involving homeworkers concern delivery people. If the Yodel driver delivering your heavy new printer trips over your unmarked doorstep, breaks his wrist and can’t work for weeks, you have a major problem to sort out and a considerable source of stress.In short, if a customer gets hurt or damages anything in your place of work, your business could be liable for any compensation claim or legal costs. It’s your responsibility to offer the public a safe environment.

To cover yourself against mishaps such as these, it’s wise to take out self-employed public liability insurance.

Do you need public liability insurance?

Nearly every type of business should be covered by some kind of public liability insurance. The truth of the matter is that you can make your working environment virtually bulletproof, but accidents will happen. Leaving yourself exposed to legal action won’t do much for your business, either financially or PR-wise.

There are hundreds of UK businesses out there that won’t trade with you unless you’ve invested in self-employed public liability insurance, and many local councils often insist that businesses in their catchment area have public liability cover lined up before they begin to trade.

Let’s be clear: public liability insurance isn’t (usually) a legal requirement, unlike employers’ liability insurance. However, it could protect you from claims that run into the millions. So it’s a big deal.Not many businesses can operate with peace of mind without having public liability insurance. You also have a moral duty to ensure someone is looked after if they suffer an injury on your premises.

How does public liability insurance protect your customers?

Whatever your business – a hairdresser’s, builders’ yard, garage or home-based venture – if a customer or visitor gets injured or has any possessions damaged as a result of your business, you will need to be sure you can compensate them.

You’re a business owner and, as such, ensuring members of the public are safe is your duty of care. That means carrying out risk assessments and health and safety checks.This duty of care is different for the kinds of people your business will come into contact with. To set the correct level of public liability insurance, you need to know the three different categories the law classifies visitors into.

Invitees

Who are invitees? They’re members of the public who you’ve invited to interact with your business. It could be through advertising or by that signage outside. Or, it could be simply implied by having public premises. Business partners and contractors are also classified as invitees.

It’s your duty of care to take every step possible to offer invitees a safe environment when interacting with your business. In return, they have a duty to take reasonable steps to ensure their own safety.

Licensees

There’s a lesser duty of care here because licensees have permission to be on your premises but you haven’t invited them. This category might include door-to-door salesmen who are looking to do business with you.

Any business premises with unlocked doors that are not obviously open to the public, such as a factory, might attract this sort of visitor.

Trespassers

Yes, you heard us right. You have a duty of care to anyone who happens to be on your business premises, and that can include people you are denying entry to. Trespassers are people who are on your property without your permission. The duty of care here includes an agreement not to generate deliberate danger.

What does public liability insurance cover?

Well, in theory, anything could happen. A masked intruder could be eaten alive in your washroom by a Bengal tiger. However, the more common claims fall into these categories.

Disrepair

Wobbly flagstones, torn carpets, a protruding nail in an awkward place. These and more are all potential hazards you’ll want to guard against on your properties and places of work. However, accidents can still happen.

Slips or trips

If you or one of your employees spills a drink in your pub, shop or office, that could constitute a hazard resulting in a claim.

Accidents

Items falling, breaking or being dropped while in use can cause accidents or damage. You should always have public liability insurance in place to deal with unavoidable events such as these.

Transport

People who come into contact with your work vehicles or with goods in transit, and people you transport, all need to be protected by public liability insurance cover.

But there’s no one-size-fits-all insurance solution because all businesses are unique and no one business will slot neatly into a particular risk category. It’s always best to speak to a specialist insurer, one that has a handle on your sector and your business model. Then they can find the right cover for your customers.

How much does public liability insurance cost?

How much public liability insurance cover costs you depends on the type of business you run, the size of your business and how much you interact with the public. Insurers will also want to take into account your claims history and how much risk is associated with the industry.The lowest level you might be looking at is around £50 a year, with some policies offering up to £10 million of cover.

When do you need public liability insurance?

As we say, there’s no legal requirement to take out public liability insurance cover in the UK. You won’t end up doing jail time if you choose not to have this kind of protection. So when do you need it?Take out public liability insurance as soon as you’ve registered your business with HMRC. It’ll make your business appear more professional. Clients will feel more confident about coming over. And you’ll have peace of mind about entertaining visitors.

Let’s face it, it’s not ideal to fall out with your biggest clients over an accident or a customer who hurt herself on your slippery floor. Taking out public liability insurance allows you to pass on the problem to your insurer while you crack on with driving your business forward.

You should be aware that, while you’re under no legal obligation to take out cover, in some circumstances, a client, industry regulator or professional body might insist that you have a certain level of public liability insurance under your business protection insurance.

What about charities and public liability insurance?

So, what liability does a charity have? Charities’ responsibilities are pretty much the same in terms of public liability insurance as they are for private concerns. Under UK law, both groups have precisely the same duty of care to the people they deal with.

However, if you run a charity, you should note that not-for-profit public liability insurance could encompass not only public liability and employers’ liability but also charity event insurance.Again, there’s no legal burden to have public liability insurance for a charity event. However, there are major risks involved in holding fundraising events among members of the public. So you might see it as a wise precaution.

Events insurance

It’s an especially important consideration for minor charities, particularly if they don’t often host large events. Regular insurance for smaller not-for-profit groups will cover day-to-day activities but probably won’t extend to events involving lots of people plus rented space and equipment.

Let’s imagine you’re holding a fundraising auction. A guest trips over a microphone wire you’ve left lying around. They tear a tendon in their knee. It’s your responsibility and you’ll be liable if and when they put in a claim.Alternatively, you might knock a hole in a wall while carting desks around in the hall you’ve rented. The owner would be within his rights to look for compensation. It depends on your insurer, but your level of cover as a small charity might not cut the mustard.So, there you have it. The whys and wherefores of public liability insurance. Now go and get that dodgy flagstone outside the front door replaced.