Public liability insurance (or PL insurance) is a type of business insurance.

It gives financial protection to your business if you're sued by a member of the public or a third party. A third party could mean a client or supplier, for example.

It's a type of business insurance or shop insurance for businesses that involve contact with the public.

Business liability insurance covers you for claims made against you for:

  • injury - for example, if a visitor to your business premises trips over your business

  • illness - for example, if a customer gets food poisoning from your restaurant

  • death - for example, you install faulty electrics which cause a fatal house fire

  • property damage - for example, your tools fall and smash a car windscreen.

Here's more information about business insurance.

Do you need this type of business insurance?

You don't legally have to take out liability insurance. But, without it, your business could be at serious financial risk.

Some public liability claims, such as personal injury claims, can cost millions of pounds. If you don't have the right cover in place, a claim like this could leave your business bankrupt.

Even in the most careful of businesses, accidents can happen. Human error is a fact of nature. Having the right insurance in place can offer you peace of mind that if the worst happened, your business would be protected.

Your clients might even ask for a copy of your public liability insurance before they do business with you. It gives them peace of mind that you're covered if anything goes wrong.

Some clients might even want to know what level of cover you have. This is especially true for certain types of businesses, like builders. It's important to check your contract every time you start a new project with a new client. You'll need to make sure your public liability insurance meets their requirements. For example, if you work with the UK Government, they usually say you need as much as £5 million or £10 million in public liability cover.

You might benefit from public liability insurance if your business has visitors to its premises. It's also good if you carry out work on client sites. These businesses include:

  • retailers (shop insurance)

  • manufacturers

  • builders

  • hairdressers

  • beauty salons and services

  • event organisers

  • licensed traders

  • caterers (café or restaurant insurance).

Short-term public liability insurance for events is available. There's even one-day public liability insurance for one-off events.

It's also worth having if you're a:

  • contractor

  • photographer

  • carer

  • tutor

  • scaffolder, roofer, or any kind of tradesperson.

These are just examples, as there are thousands of trades that would benefit from public liability insurance.

Here's how to decide what commercial insurance your business needs

What does public liability cover you for?

Public liability insurance covers you in the event of death, injury, illness or property damage caused by your business.

Professional liability insurance means you'll be covered for compensation claims. If you had to pay compensation to someone who'd been negatively impacted by your business, it would be paid by your insurer.

But it's likely that you'll also be covered for legal expenses, medical fees, and repair costs.

Legal expense cover would pay for legal proceedings and representation if somebody took you to court.

Medical fee cover would pay for the cost of hospital treatment if the NHS decided to claim against you. For example, this could cover the cost of an ambulance being called out or a hospital stay. This would be relevant if somebody had to spend time in hospital as a result of something that was the fault of your business.

Repair cover pays for the cost of repairing damage caused by your business to somebody's property. For example, if you were a dry cleaner and you ruined somebody's wedding dress, it might pay for that. Or, if you were a plumber and you caused a pipe to burst in somebody's house, it might pay for any damage caused to their home - and even their neighbours' homes.

Self-employed public liability insurance is available, so you don't need to worry if you're not a business owner. You can read more about sole trader public liability insurance here.

The level of cover you receive for each of these depends on which insurance policy you choose.

Although cheap business insurance might be tempting, it's very important to get the right level of cover so you're not caught short. Remember that a big claim could put you out of business without enough insurance. For a small business, insurance is even more important.

What's not covered by my public liability insurance?

There are several things that won't be covered by your public liability insurance, which you might like to think about.

Cover for accidents that happen to you won't be part of your business liability insurance. You might need separate personal liability insurance. Or you could check if this falls under your general business insurance policy. Accidents that happen to you don't come under public liability.

Another thing that doesn't come under your policy, is accidents that affect your employees, or damage to their possessions. This would fall under employers' liability insurance.

Both general company insurance and employers' liability insurance are legally required. Public liability insurance is optional.

You might want to get business insurance and public and employers' liability insurance from the same insurer. This would mean all your policies are in one place.

Remember that you might also need a separate product liability insurance policy. This won't be covered on your public liability insurance policy. Product liability insurance would pay compensation to someone who's been injured by a faulty product. You might want this kind of insurance if you design, manufacture, supply or sell products.

You could also think about getting other insurances for your company. For example, you might want business contents insurance or commercial building insurance.

Before choosing business insurance, you could ask yourself:

  • Does my business deal with the public?

  • Do I have a business premises to think about?

  • Do I hold stock, tools or equipment in my business?

  • Do I have employees?

  • Does my business get involved in the design, manufacture and supply of products?

  • Do I have a limited company or am I a sole trader?

  • What could somebody possibly make a claim against me for?

  • Do my clients demand a specific level of cover?

  • Does the policy I'm looking at give me enough cover for the worst possible scenario?

  • Does the policy I'm looking at have any exclusions?

Commercial insurance brokers can help you work out which insurances you need or would benefit from.

Here's more information about business insurance.

How to get the right liability insurance coverage

To find the best public liability insurance, compare as many quotes online as possible.

Compare each business insurance quote to see which has the benefits you're looking for. The benefits might include:

  • Liability limits: This is how much your insurer will pay if you make a claim. You can choose a maximum limit between £1 million and £5 million. This is usually based on the type of business you run. For example, a construction company might need a higher level of cover than a tutor.

  • Other cover options: Most insurers offer public liability as part of a business insurance policy. You can cover stock and equipment, business interruption, and employers' liability. Here is how to choose what business insurance you need.

  • Cost When it comes to public liability insurance, cost varies a lot between insurers and policies. Compare quotes from different insurers before you take out cover. This will help you to find cheap public liability insurance which still offers the cover you need.

If you're unsure what cover your business needs speak to an insurance broker before you compare business insurance. They can offer you advice on finding the best insurance.

How much does public liability insurance cost?

When it comes to public liability insurance, cost varies a lot between policies.

Remember that finding cheap public liability insurance isn't the ultimate goal. It's about finding the right level of protection, to support you if any claims were made against your business. Bear this in mind when you compare public liability insurance options.

But, while you of course want to safely insure, company finances will also come into it. So, once you've found a public liability insurance quote that gives you the level of cover you want, there are a couple of things you could do to reduce the cost.

You could see if your business insurance cost down go down if you offer to pay a higher voluntary excess. The voluntary excess is how much you have to pay each time you make a claim.

You could also see if your business insurance quote goes down if you pay up front in full. When you pay for insurance monthly, it's like getting a loan, so interest is added. By paying up front in full, the premium will be cheaper.

Don't forget that public liability insurance is an allowable business expense. This means it's tax deductible. Just keep a record of your receipts, invoices and policy documents for HMRC.

Public liability FAQs

Q

Do I legally need to have public liability insurance?

A

No, but it provides essential cover if your business is sued for causing injury, illness or death to a third party.

Q

Can I get public liability cover if I am self employed?

A

Yes, you can get cover if you are a sole trader or run a small business. Here is how to get business insurance if you are self employed.

Q

Will it cover injuries to employees?

A

No, you will need employers' liability insurance if you have anyone other than family members working for you. You can compare employers' liability here.

Q

Does it cost to claim on public liability insurance?

A

Yes, you will need to pay an excess for any claim made on your public liability policy. This is usually around £250 per claim.

Q

What limit of cover does my business need?

A

It depends on the nature of your business, and how often you visit clients or have them visit you. Speak to a broker who can advise what you need.

Q

Will it cover me if I need to visit a client?

A

Yes, public liability insurance covers you both on site and when you visit other premises in your business capacity.