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what is public liability insurance

Liability insurance: what is it and do I need it?

by constructaquote - 1 June 2016


Liability insurances could protect you, your business and your employees against damages and compensation claims that arise from conducting your usual business activities.

These insurances are designed to protect you against problems you may not foresee from legal challenges, as well as accidental damage to people, property or the public.

This quick guide looks at the the two main kinds of liability insurance – public liability and employers liability insurance – and aims to give you the knowledge and information that you may need to make the right choice for you and your business.

Public liability insurance

If you work with the public at their property, or perhaps clients or the public frequent your offices or premises to do business with you, then you may be considering public liability insurance.

Public liability insurance could protect you and your business against claims brought against your business for injury to their person or damage to their property.

Two examples being:

  • A tin of paint falling from a ladder and hitting your client or a member of the public on the head.
  • Or, that same tin of paint falling and landing on the customers carpet, subsequently staining it.

Public liability insurance can offer you protection against successfully awarded claims for events such as these to help cover costs including legal fees, compensation and other expenses. You may want to check with your broker or insurer to find out exactly what your quotation or policy covers you for.

It’s worth noting that public liability insurance is not compulsory for most businesses; the exception being horse-riding schools and associated businesses.

However, despite it not being mandatory this does not negate the risk of a claim. If you are held liable and a claim is successfully brought against you, you would be expected to pay out (with, or without insurance).

Therefore you may need to decide whether the possibility of a claim, which could cost hundreds or even thousands of pounds, is worth the risk.

Another consideration is that your customers may want to know that you have public liability insurance before they do business with you. This is especially true for small building companies and contractors and increasingly true for other businesses that are in frequent contact with the public.

How much you will have to pay for your public liability insurance will largely depend on the level of cover you require (that is how much money the insurer will pay out for a single claim against you) and the type of business you are in, i.e. the risk your business is exposed to. Insurers will also base their premiums on whether or not you have previous claims made against you, your businesses turnover (not your profit) and even your location.

Employers Liability Insurance

For many businesses, hiring extra pairs of hands is a reason to celebrate, but with success comes responsibility.

As your business grows you must also make sure your new recruits are protected against workplace risks and as their employer this is not only your duty of care, it is your responsibility to ensure you have employers liability insurance.

Having an employers liability insurance policy ensures that your business has a minimum level of protection should an employee seek compensation as a direct result of becoming injured, unwell or suffering damage to their personal property from their employment with you.

Employer’s liability insurance is mandatory if you employ people to work within or on behalf of your business and control where, how and when they work. Persons also considered employees also include people you have a contract of service with, those whom you pay National Insurance contributions for, volunteers and even people undertaking work experience within your business. An exception to this law is if your business is classed as unincorporated and only employs close family members.

(It’s worth noting that HSE defines close family members as; husband, wife, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister.)

By law you must have at least £5million worth of cover, however constructaquote.com is able to offer £10million pound as standard.

The consequences of not having a policy in place are severe; if you don’t have employer’s liability insurance in place as soon as you employ someone, then you could be fined up to £2,500 for each day you went without insurance.

Make informed decisions

Unfortunately as many businesses across Britain find out, taking someone to court for damages, even over a small injury, is increasingly common and could cost your business dearly.

Talk through your insurance needs with one of our executives who will be able to give you all the information you need to make an informed decision regarding your insurance requirements.

You may also wish to find out more about the different business insurances available including professional indemnity insurance and Commercial Legal and Tax Investigation insurance.

Here at constructaquote.com we work closely with our panel to help you find the right level of cover at competitive prices.