Do I Need Public Liability Insurance?

It can be tough to understand what your company is responsible for in business, whether you operate as a sole trader or as a limited company, and public liability insurance is something that many people voice their concern over.

In this article, we’re going to explore everything you need to know about public liability insurance, when you need it, how much it’s likely to cost and much more.

Additionally, we’ll offer some nuggets of advice which should help you deduce whether you’ll need to attain public liability insurance before carrying out work for your customers and clients.

If you find yourself questioning whether you need public liability insurance, this article will be of great help!

What is Public Liability Insurance?

Public Liability Insurance protects your business in the event a member of the public (regardless of if they're a customer, client, or passer by) suffers injury or damage to their property due to work carried out by your business activities. It helps cover legal costs, compensation claims, and any related expenses.

However, it doesn't cover legal disputes, such as issues with contract disagreements or claims that aren't related to property damage or physical injury.

Similarly, public liability insurance covers you if someone is injured whilst residing on your business premises or due to the actions of your business. If compensation is awarded, the NHS can reclaim treatment costs under the Injury Cost Recovery Scheme. Your public liability cover will typically cover this.

It is important to note that Public Liability Insurance doesn’t cover any injury to yourself or your employees, and it doesn’t protect you in the case of an employee suing your company. Instead you require Employers Liability Insurance. This is a legal requirement for UK businesses that have staff, although it may not be required if you only employ close family members or your staff are based outside of the UK.

In this guide we look at Public Liability Insurance in regards to tradesmen in the UK. So, whether you're an electrician, plumber, builder, carpenter or responsible for running a business within any other trade, Public Liability Insurance should be taken seriously.

Do Tradespeople Need Public Liability Insurance?

There isn’t any legal requirement for tradespeople to attain public liability insurance to work in their trade, but it is highly recommended and there are many reasons why public liability insurance is a good idea to have. By not having public liability insurance, you do leave yourself vulnerable to legal costs in the event that someone sues your company.

These costs are very high and can lead to bankruptcy of the business if you can’t afford to fight the court case with the proper legal support. Additionally, most organisations will only work with you as a tradesperson if you have public liability insurance, as otherwise, it would leave them vulnerable to the same things.

Essentially, it is advised to take out public liability insurance in any business that would be you interacting with members of the public in any capacity to protect you and your business from any court cases.

How Much Does Public Liability Insurance Cost?

Estimating the price of public liability insurance is a difficult thing to do without specific details about your business. However, the average annual premium for public liability insurance in the UK for tradesmen is priced between £100 and £120. Although in some cases AXA offers policies that are much cheaper, starting from just £60 per year.

Now, this can be paid in full or in monthly instalments, and in the grand scheme of things, this amount is incredibly cost-effective considering the consequences of not having cover but needing it.

Ultimately, you can get cover for around £5 per month if you're in a low-risk trade. If you're in a higher-risk trade or you want a higher level of coverage, then you should expect to be charged about £10 to £15 per month by most insurance companies.

There are a number of factors that affect the price of public liability insurance, including but not being limited to:

• The size of the business
• The location of the business
• The industry of the business
• The type of work you complete
• Annual turnover
• Record of previous claims
• The level of cover requested
• Specific inclusions or omissions in the cover

How Much Public Liability Insurance Does a Tradesperson Need?

Now, each insurance provider will offer different tiers of cover, which will, in turn, cost different amounts. It can be tough to decide how much cover you need, but ultimately, the more cover to take out, the more protected you are from unforeseen circumstances.

Usually, there will be an essential package that will include everything tradesmen from builders to plasterers and painters need for their public liability insurance.

Again this isn’t a legal requirement, but it is recommended quite broadly. This essentials package will include things like legal support, indemnity insurance, financial loss and other basics.

The higher tiers will usually include everything in the essentials tier with the addition of some added covers including equipment and tool replacements, personal accident covers and death covers. This tradesmen insurance is more common among higher-risk professions, such as roofers or tree surgeons.

Additionally, the higher tiers will usually have an increased amount of money per cover, so for example, the essentials tier may have a total cover of £1million, whereas the top tier may have as much as £5million or £10million.

Approximately 24% of customers opt for the higher-tier tradesmen insurance with only 10% paying less than £60 per year for low-end cover.

You can often combine other policies into your public liability insurance, such as business insurance and employer insurance. By combining all of three separate policies under the same umbrella, you're likely to save money in the long run.

What Does Public Liability Insurance Cover Not Include?

Public liability insurance doesn’t cover injuries to yourself or your employees. Employee injuries are usually covered under Employers’ Liability Insurance, which is legally required if you employ any staff.

If you wish to insure yourself against injury, the alternative is to take out Personal Accident Insurance or a tailored policy that includes this cover as part of a wider insurance package.

Public liability insurance won't cover all the costs of a claim against you, as most policies require that you pay an excess for each claim that is made. Excess is a pre-agreed figure that you will pay per claim and this is a big factor in determining the cost of the policy.

For example, if you are taken to court and ordered to pay £5,000 to a member of the public, your insurance company will pay this less what your excess is.

Now, it may be £50 or it may be £5,000, but this figure will be your responsibility. When you take out tradesmen insurance ensure that you are clear on the amount of excess that you need to pay in the event of claim.

How Do I Find Tradesperson Public Liability Insurance?

The internet is the best place to find most things these days, not just because of how easy it is, but because of all the information available.

Firstly, you can use search engines and comparison websites to find some companies that offer public liability insurance.

Next, you can enter your specific information to attain some quotes and use these figures to cross reference against the features and benefits of the policy.

When you find a company and quote that you like the look of, delve a little deeper into the company and look at some reviews from people that have used them for insurance.

Now, don’t just check how easy they were to deal with when purchasing the cover, instead check how they stand up when it comes to making a claim against the insurance, this is where the good companies set themselves apart from the rest. From here, you’re all but done!

Conclusion

Of course, in business it’s important to reduce the amount of unnecessary costs as possible, but while public liability insurance isn’t a legal requirement, it’s far from unnecessary.

Your business is your life, and if you find yourself in an uncomfortable position relating to court cases and lawsuits, you will be more than grateful of the £10- £15 per month you have been paying for your public liability insurance.

Ultimately, public liability insurance is there to protect the longevity of your business and cover you for any of these unforeseen circumstances.

Before you commit to an insurance company for this cover, make sure you do your due diligence into the company history, the amount of claims that they pay out successfully, reviews and any other important information that can indicate whether they are the right company to be working with.

Other Essential Tradesmen Insurance

It's worth noting there are a number of other types of tradesmen insurance that is important to also consider, especially any of those that may be a legal requirement.

• Employers’ Liability Insurance — Required from the moment you have any direct employees, the insurance covers claims for injuries or illness by the employee that have been caused due to their work.
• Tools and Equipment Insurance — Covers theft, loss or accidental damage to tools including expensive equipment or machinery. This can often be included as an add-on to other insurance policies.
• Commercial Vehicle Insurance — Essential if you use a vehicle for your trade business, as you won't automatically be covered by standard personal vehicle cover.
• Contract Works Insurance — Protects against fire and flood damage, vandalism or theft during the time a job is being completed. This is suited towards those contracted to work on a building or construction site.
• Business Interruption Insurance — Less common than Contract Works Insurance, but similar in that it provides insurance in the event of damage such as flood and fire causing long-term delays.