Public Liability Insurance
Unfortunately, accidents do happen even with the best precautions you might have put in place.
Public Liability Insurance protects you and your business against allegations that you have caused a loss, damage, or bodily injury to a third party, it will pay for legal costs and any compensation that may be awarded up to the indemnity limit of your policy.
Let us explain, Public Liability insurance is one of those insurance covers that every business should have, it could save you having to pay for a claim yourself that could cost a considerable amount of money, even the simplest of claims could be very costly.
A badly placed pile of boxes for someone to trip over at your premises, delivering that bulky product to your customer you wipe the best Ming vase off the reception counter, or that spilled liquid at your customer’s premises leaves a stain or damages the floor, the list is endless but these types of accidents can happen at any time.
Do I need public liability cover for my business?
Yes, you do!…. Well, it is your option of course but considering that the financial consequences of not having it can be considerable, taking the chance not have the cover is really not worth thinking about.
Public Liability cover applies to all businesses, even if you are proven to not be responsible there are all the expensive legal costs involved too, so without the cover, you would need to find the funds to defend yourself, think about that one for a minute.
What is Public Liability Insurance?
We have already mentioned what it provides cover for, but how does it work in reality.
You are likely to know what it covers but what triggers a claim? A public Liability claim isn’t just triggered because you think it should be, you might have spilled paint on the customers best Axminster but just contacting your insurer and saying hands up to it isn’t going to get you a cheque to replace the carpet for your customer, that would be far too easy.
You have to have been negligent, the paint scenario might be obvious but many claims aren’t so, and anyway it’s the third party, the person/business, or their representative that have suffered who needs to make the claim, putting their allegations to you, these, in turn, are investigated by claims experts who will decide to pay or dispute the claim.
Public Liability if you are found to have been negligent will defend you and agree on compensation up to the Public Liability indemnity limit.
What is a Public Liability Indemnity Limit?
Put simply this is the amount of cover you have bought when you took the insurance out. The Indemnity Limit minimum these days is usually £1million although £2million is more than the norm as is £5million. Above this, there is £10million and beyond but these usually have to be layered on several policies that effectively stack up limits, usually with different insurance companies, they are called excess layers.
Need advice about the levels of indemnity available? Its always advisable to discuss your requirements with brokers that deal with this type of insurance cover daily, speak to us about how we can help you on 0330 058 0260
How do I choose a Public Liability Indemnity Limit?
There can be many reasons that you need to consider the Public Liability Indemnity Limit, you must get it right. Let’s look at a few of the reasons.
What does your business do, if you run your business from home, you don’t have customers coming to see you then the risks are likely to be low.
At the other end of the spectrum your contracting business takes you to some very expensive properties, your business might involve even the smallest amount of heat so a potential higher risk. Consider what your risks might be and how you might be exposed, you need to purchase Public Liability Indemnity Limit to reflect the type of work that you do.
Sometimes before you go on site your employer or main contractor, for instance, might decide for you the limit you should have, without proof you might not be let on site. Limits of £10million can be quite normal in these circumstances.
Some insurance policies automatically come with an indemnity limit, these are set within the policy you have bought, such as a restaurant package policy, or a shop insurance package, these limits are usually not optional.
What is a Public Liability excess layer?
Usually, an insurer wouldn’t provide high limits all by itself, particularly if there was heat used for instance. The insurance would be placed with several insurance company’s which effectively spreads the risk so one insurer isn’t responsible for an entire loss.
What is an example of an excess layer?
A £10million public liability indemnity limit is required, insurance company A will provide cover for £5million called a primary layer, Insurer B would then provide an excess layer of £5million.
How much does Public Liability Insurance cost?
This is one of those how long is a piece of string questions; there are so many factors that go into the premium calculation.
For small businesses, particularly those in the construction sector, self-employed contractors, for instance, this can be quite simple and can be based on the number of people in the business, this is referred to as a Per-Capita Liability Insurance policy.
For larger businesses, public liability insurance is usually rated on the wages and the turnover of the business. Depending on what work is being carried out can determine what rate is applied, as an example a company that cleans windows at great height is going to have a much higher rate applied to it than the one that assembles rabbit hutches…
As a manufacturer it does depend on many factors, your processes, whether you work away from your business premises, installing what you have made as an example.
Do I need more cover than just Public Liability?
This depends on your business and what it does,
Product Liability: if you manufacture a product then Product Liability Insurance is essential, the great thing about this is that for many business types or policies, taking out Public Liability it’s almost certain that Product Liability Insurance will be included.
You can find out what product liability insurance covers here
Employers Liability: is essential and also a legal requirement (there are a few exceptions) where you engage labour of any description.
Directors & Officers Liability Insurance: this protects the assets of company directors, a limited company is liable to the extent of its shares, company directors have no such limits and are wholly responsible for their actions.
Professional Indemnity: there are various types of professional indemnity and they do differ depending on your business.
Offer advice for a fee?: A typical example might be an architect, they provide plans and you build, they are not involved in the construction.
Builders or Contractors Professional Indemnity can sometimes be referred to as Design & Construct, there might be buildings or other structures which are built or modifications made to premises by the builder, they have designed it and constructed it, it’s always prudent to seek advice about which type of policy is best for you.