FinancesWhat is public liability insurance and do I need it?

What is public liability insurance and do I need it?

One of the most important elements of running your business is your insurance cover. It’s often forgotten or overlooked, but you need to think about what to insure and how much cover is required. There are a range of types of insurance policies that each cover different elements of your business – some are required by law, some will help you reduce the risk to your business. Jostling at the top of your list with the others is public liability insurance, which insures your business against third party claims.

What is public liability insurance?

Public liability insurance protects your business against claims from third-parties, typically a member of the public. If a member of the public makes a claim against you in connection with your professional activity, public liability insurance helps protect you from further expenses.

How does public liability insurance work?

The last thing you want is for your business to cause harm to someone else, yet no matter what area of work you are in, there are always hazards involved.

There is a danger that something could go wrong and a customer, client or visitor to your business is injured or damages something in their possession or even a tragic and fatal accident.

If someone believes they have been impacted by your company’s actions, there is a potential they will sue for damages. If you are found legally culpable, you may have to pay damages to the person in compensation; this is where public liability insurance can help as your insurance policy should cover any legal costs and any compensation.

Public liability insurance might be needed if visitors to your business enter areas where there are moving vehicles

What Does Public Liability Insurance Cover?

If a member of the public sues your company, there may be a lot of additional expenses that your public liability insurance will cover. If an individual makes a claim against your business, you must contact your insurer and they will start the process and potentially even hire experts or lawyers.

Your insurance should pay any damages, for example there may be claims for property damage restoration or replacement, compensation for lost wages or medical expenses, or even claims for pain and suffering.

Your insurance policy should also cover any costs associated with paying the claimant’s legal fees, should the court require you to do so.

A good public liability insurance policy should cover you for at least £1 million because these claims can total hundreds of thousands (or even millions of pounds).

This may seem like a lot, but it’s crucial to have adequate insurance coverage because the directors of your business could end up being responsible for any short-fall.

Therefore, choosing the appropriate level of cover is essential.

Who Needs Public Liability Insurance?

It’s probably a good idea to purchase public liability insurance if your business has contact with individuals who aren’t your direct employees or workers, so public liability insurance is normally required for any type of business.

Here are a few examples of businesses where it is an policy:

  • if you have a physical location where you serve people; this includes businesses like shops, restaurants, cafés, hair salons, bars, and venues, among many others.
  • if you work in someone else’s home, such as an electrician or plumber.
  • if your business is an office, factory, or workshop where clients, vendors, or consumers visit.

Before you may start working in some industries, you might need to acquire public liability insurance.

For instance, if you operate as a contractor, your clients may demand proof of comprehensive insurance before they agree to hire you.

Many trade groups also mandate minimum public liability insurance coverage for all of their members.

Is Public Liability Insurance Legally Required?

Insurance against public liability is not required. If you have any employees who aren’t related to you directly, the law mandates that you carry employers’ liability insurance, whether or not you also get public liability insurance is entirely up to you.

Nevertheless, it’s important to get the appropriate level of insurance.

Aside from allowing you to join trade associations and expand your customer base, becoming insured ensures that you won’t be saddled with astronomical costs in the event of an accident.

What If I Don’t Have Public Liability Insurance?

If you don’t have insurance, you will be responsible for all associated charges; public liability insurance pays out to cover the costs of any claims made against you.

Without insurance, you’ll have to pay for all of these expenses out of your company’s assets or, if you’re a sole proprietor, your own pocket because lawyers may be expensive and settlement amounts might potentially reach millions.

Without insurance, these lawsuits might quickly drive a small company out of business: all you’ve worked for might just disappear overnight.

However, if you have insurance, you will only be required to contribute a small excess of a few hundred pounds to any claims. The rest will be handled by your insurance, ensuring continued protection for your company.


To conclude, while public liability insurance isn’t a legal requirement, it is definitely recommended that you get it to protect your business and personal assets.

Without it, you could end up having to pay large amounts of money should something go wrong, bankrupting you and your business. 

You can find many insurers with the appropriate plans to make sure your business is in good hands when it comes to public liability.

To avoid being underinsured, you should choose a plan that covers at least £1 million of cost that you might be faced with in court.

Written by

Mark Hodgson
Mark Hodgson
Mark Hodgson is one of our expert writers. Mark is our lead researcher and editor who writes our main guides and expert topic coverage. He’s passionate about helping entrepreneurs, startups and small businesses with practical advice delivered clearly. Mark’s worked for a number of business magazines and titles and has started two small businesses himself, so has first-hand experience in setting up, managing and growing a small business and shares his expertise with our readers.

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