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Public Liability Insurance Guide

Public Liability Insurance Guide

For most UK businesses, public liability insurance is an absolute must. This kind of insurance could provide a business with financial protection in the event that a customer or other member of the public is injured or suffers some kind of loss that the business is responsible for. If such an event occurs, this insurance might cover the costs of compensation paid to the injured party, as well as any legal costs that are incurred by the business.

What Kinds of Businesses Need Public Liability Insurance?

Public liability insurance is typically not a legal requirement, but it’s still generally regarded as an important kind of cover for most businesses, and it’s insurance that a business can’t usually afford to cut corners on. In general, a business needs public liability insurance if they have premises that are visited by customers, clients, or members of the public; if employees work on or visit other business premises; if business-related activities occur in public places; or if the business gives advice for a fee.

In some industries, clients expect that the businesses they work with will have a specific minimum level of cover, and may avoid doing business with companies that don’t have that minimum level. For example, businesses that work in the public sector are often expected to have public liability insurance cover of £5 to £10 million, and government authorities generally expect that companies they do business with will have £10 million in public liability cover.

What does Public Liability Insurance Cover?

Standard public liability policies tend to provide coverage for events that occur in four main category types:

  • Disrepair: Incidents that occur due to disrepair of business premises. For example, if a customer trips over a snagged carpet on the business premises, or falls down a flight of stairs when a stair rail breaks.
  • Accidents: This category includes incidents such as purchased items breaking while in use, which could cause injury or damage in unpredictable ways.
  • Slips and falls: For example, events that occur as a result of something spilt on the floor of a private or public business area, such as a slip, trip, or fall by a member of the public.
  • Transport: Events relating to the use of a work vehicle.

The insurance could provide coverage for expenses a business occurs as a result of these kinds of events. Typical expenses may include:

  • Compensation claims made by an injured customer or third party.
  • Costs of repairing damage caused by the business.
  • Costs of emergency transport and medical treatment for an injured third party, if the NHS pursues a claim relating to the same event.
  • Legal expenses incurred by the business, and sometimes by the claimant.

Levels of Coverage

When an insurer assesses a business for public liability insurance, they usually assess what’s called the limit of indemnity. This is a measure of how much insurance a business needs, and how much the policy could pay out if a claim is made.

While there may be lots of different policy types availablemany of which are specific to various businesses and industriesmost insurance companies may offer policies with set limits of indemnity of up to £1 million, £5 million, and £10 million.

Special Coverage

Depending on the nature of a business, an owner may need additional kinds of coverage that may not be provided for in a standard public liability policy. For example, if the business is organising a special event, a short-term events insurance policy may be needed to provide liability insurance for the event itself, as well as to cover any problems that may occur for other reasons.

Another consideration is whether someone needs run-off cover. This kind of public liability insurance covers claims that are made up to five years after the actual event takes place. Run-off insurance is tailored towards businesses and individuals who have ceased trading, and could provide coverage for claims that are made after cessation of business.

Comparison of Public Liability Insurance Policies

The nature of this kind of insurance, where the basic terms of all policies are very similar, means it’s fairly easy to compare public liability insurance quotes. For the level of indemnity a business decides on, it could be straightforward to look at premium costs and excess amounts to decide which policy is more affordable.

However, if someone is making public liability insurance comparisons online, bear in mind that a general quote may not accurately reflect what each individual insurance provider could offer and a tailored quote based on industry and business practices might be more appropriate.

Minimising Premium Costs

The cost of public liability insurance usually depends on a number of things: the size of a business, the specific industry, and the level of risk that’s involved in doing business on a day-to-day basis. In terms of getting cost-effective coverage, it’s not so much about getting cheap public liability insurance as it is getting exactly what the business needs.

Depending on the nature of the business, it may be possible to minimise premium costs in certain ways. For example:

  • Ensuring that all staff receive adequate training and are properly qualified for their work.
  • Ensuring that business premises, tools, equipment, and vehicles are properly maintained.
  • Developing a risk-management plan.

As with most other kinds of insurance, premium costs could be reduced if a company opts to pay a higher excess. However, it’s probably important to consider whether a business could afford to cover the cost of a higher excess if a claimable event does occur.

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