Public Liability Insurance
What is public liability insurance and why is it crucial for businesses?
Understanding public liability insurance
Public liability insurance is a type of business insurance designed to protect in the event of claims made by third parties for injury, illness, or damage to their property. It will cover legal costs and any compensation costs awarded that may be due if a business is found to have a legal liability for incidents that occur in connection with its operations.
It is particularly relevant for businesses that have direct interactions with the public, such as retail stores, restaurants, and event organisers, however it is also recommend for persons which work in an office environment. It serves as a safeguard against unforeseen accidents that could otherwise have financial implications. For example, if a customer slips and falls, the business could be held liable for the resulting injuries.
Public liability insurance covers legal fees, compensation, and other costs associated with claims made by third parties. Claims involving severe injuries, such as broken bones, head injuries, or long-term disabilities, can result in high compensation payouts. Compensation typically covers medical expenses, rehabilitation, lost earnings, and future loss of earnings, which can amount to significant sums.
> Liability Insurance Explained
What does public liability insurance cover?
This part of the coverage addresses injuries that third parties suffer because of the business activities. For example, if a customer slips and falls on a wet floor in a store or restaurant and sustains an injury, the cover would protect against the medical costs and potentially any legal fees if the injured party decides to sue. Public liability insurance also covers damages to third-party property caused by the insured's business activities. For example, if an employee accidentally damages a customer's property while providing a service, the cover can provide for the repair or replacement costs.
Public liability cover includes the cost of defending against a claim, including when a claim goes to court, regardless of the outcome. This is vital since legal fees can be substantial and could financially strain a small or medium-sized business. If the business is found liable, the cover will provide for compensation payments, which might include not only direct reparations but also compensation for loss of income to the injured party.
Why public liability insurance is important?
For many businesses, public liability is essential as it protects against significant financial losses and legal fees. The business insurance not only protects the financial assets of the company but also enhances its reputation, and compliance with legal and contractual obligations, all of which contribute to a robust business environment. The product also demonstrates a commitment to safety and responsibility, enhancing trust with clients and the public.
Compensation
Awards made by courts or settlements agreed by the insurer will be available for injury or property damage of persons other than your employees.
Legal defence
Access to an experienced law firm to protect your interests and manage the claim is an important feature of a public liability policy.
Adjustable limits
Cover will start a £1 million and then increase depending upon your exposure. The most commonly purchased limits are £5m and £10m.
Ensure you meet your contractual requirements with a public liability policy
Liability cover starts at £88 per annum - give one of our experts a call to discuss your business liabilitiesSafety and risk management
Working away
Cover will protect your company against compensation claims and legal costs if a third party suffers injury or property damage while on your premises. The majority of policies offer cover while working away from your premises. This is typically provided to accommodate a wide range of business activities, however sometimes the cover is removed.
Claims examples
Below are the most common public liability claim scenarios: slips, trips and falls, falling objects, inhalation injuries, burns or scalds, dangerous pathways, glass injuries, door injuries, lift / escalator accidents, hazardous objects, whiplash injuries, crashes and collisions, and exposures to hazardous chemicals.
How much cover?
The minimum amount of cover is typically offered is a £1 million limit. However, most businesses or organisations will typically purchase a minimum of £5 million or £10 million limit. Compensation awards for a severe injury have been increasing in the UK. Even working in an office environment, a slip, trip or fall could result in significant costs and damages provided to the claimant.
Public liability insurance cost
The cost of your public liability insurance will depend on a number of different factors such as:
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the limits of liability you’ve chosen for each cover;
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your particular trade or profession;
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are you working with sources of heat, such as blow torches or welding equipment;
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are you working with at depth (+3 metres) or at height (+15 metres); and
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your claims history over the last five years.
At Get Indemnity public liability quotes start at £88 annually or £7.33 monthly. How insurers calculate your public liability insurance cost will depend upon a varierty of different rating factors. The industry you work will likely be the most important determining factor because this will indocate whether manual work will be undertaken. Bodily injury and property damage claims will be more prevelent with industries that operate machinary, work from height, work from depth and work with heat.
Determining your business insurance needs
Consider the nature of your business and the potential risks involved. High-traffic businesses like retail stores, contractors, restaurants, or event management companies typically face greater risks. It's also important to choose a limit of liability that reflects your exposure to risk given that the cost of compensation claims is increasing - sectors such as construction should be considering a limits excess of £15 million.
Talk to one of our specialist brokers about your needs
Business liability cover can be tailored to your industry specific requirementsWhat can a public liability policy provide protection against:
Slips, trips, and falls
If a customer or visitor slips on a wet floor, trips over uneven flooring, or falls due to poor lighting, a public liability policy could cover the related bodily injury.
Falling objects
If an item, like signage or shelving, accidentally falls and injures a third party or damages their property, a policy may cover associated claims.
Business equipment
If equipment like ladders or tools causes accidental harm or damage when in use around third parties, the policy might cover resulting claims.
Property damage
For businesses that work on-site, like contractors, damage to a client’s property (e.g., accidental drilling into plumbing) could be covered.
Bodily injury
If a customer, visitor, or member of the public, sustains an injury whilst on the insured's premises or as a result of the insured's business activities.
Legal liability and negligence
Negligence occurs when a business fails to take reasonable precautions to prevent harm, resulting in injury or damage to a third party. Public liability insurance is designed to protect businesses against legal liability claims that arise from such incidents. It ensures that the business is not financially crippled by the legal expenses associated with defending a negligence claim and any resulting compensation.
1.) Accidents on Business Premises
2.) Damage to Third-Party Property
3.) Events and Public Gatherings
4.) Accidents Caused by Employees
Even if the business believes it is not at fault, defending against a negligence claim can be expensive. If the business is found liable, the cover will not only provide for the legal costs associated with defending the claim, but will pay the compensation awarded to the claimant. This can include medical expenses, loss of income, and damages for pain and suffering. In some cases, settling a claim out of court is the best option and your insurer will make this decision to minimise their costs.
Related links
Frequently asked questions
Can you provide a couple of claim examples?
Shop Slip and Fall
A customer in a retail shop slips on a wet floor that was recently cleaned but not properly marked with warning signs. The customer suffers a broken wrist from the fall. The customer files a claim against the shops who operates as a sole trader for medical expenses, lost wages during recovery, and pain and suffering. The cover pay the shop's legal costs to defend the claim and any compensation awarded to the customer.
Construction Site Damage
A construction company is working on a new building adjacent to other businesses. During construction, debris falls onto a nearby car, causing significant damage. The owner of the car starts a legal claim against the construction company for the cost of repairs and rental car expenses while their vehicle is in the shop. The construction company's public liability insurance would cover the costs associated with the damage and any legal fees involved in the claims process.
How to make a claim under your policy?
Immediate Action and Notification - As soon as an incident occurs that might lead to a claim, it’s important to act quickly. Ensure that any injured parties receive immediate assistance and that the scene is secured to prevent further damage or injury. Contact your provider as soon as possible to notify them of the incident. Most policies have specific time frames within which you must report an incident.
Prepare Documentation - Gather all relevant information and evidence about the incident. This includes taking photographs of the accident scene, collecting names and contact information of witnesses, and securing any physical evidence that could be related to the claim. If there are any injuries or property damage, document these in detail. Medical reports, repair estimates, and receipts for any related expenses should be collected as they will be necessary when filing the claim.
Incident Report - Write a detailed report of the incident. Include the date, time, and location of the event, what happened, the actions taken immediately following the incident, and any other relevant details. This report will be part of your formal claim submission and will help the insurer assess the situation and determine liability and coverage.
Once the claim is submitted, the insurer may assign a claims adjuster or investigator to the case. It’s important to cooperate fully with them, providing any additional information or documentation they might need.
What is product liability insurance?
Product liability is a specific type of business insurance designed to protect businesses that manufacture, distribute, or sell products from financial loss due to legal action taken by a consumer. This business insurance covers the costs associated with defending and settling claims that a product caused injury, death, or property damage due to the product failure.
What is professional indemnity insurance?
Professional indemnity protects businesses against claims made by clients for losses or damages due to the professional service or advice provided. This kind of product is particularly important for individuals and firms in the service industry who provide expertise, advice, or professional services to their clients.
What coverage limits do we need?
If you work within construction or a commercial environment it is becoming increasingly common for businesses to purchase an excess limit with £15m, £20m or £25m common practice. If you undertake manual activities or you are perceived to work in an industry that is exposed to personal injury claims speak with one of our account executives and we can benchmark how much cover companies of a similar size purchase.
What are the key benefits?
- Financial Protection: It covers the legal fees associated with defending a claim, including court costs and any settlements.
- Risk Management: It offers a buffer against the unpredictability of accidents and incidents that could otherwise financially cripple a business.
- Business Continuity: It helps ensure that a business can continue operating without disruption, even in the face of significant legal challenges.
- Contractual Requirements: Industries such construction and events will require proof of cover (i.e. certificate of insurance).
What does public liability exclude?
- claims by employees;
- intentional damage or contractual liabilities; and
- professional negligence.
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