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How Much Public Liability Insurance Do I Need?

How Much Public Liability Insurance Do I Need

As a business owner, one of the most critical considerations is safeguarding your company against possible liabilities. Litigation is a potential outcome from all manner of issues involving customers. From accidents to poor service delivery. If this occurs, it can be costly to get through a legal battle which can leave you with substantial financial losses.

Public liability can help to protect you against these types of losses. It provides a safety net for businesses of all sizes and is an overhead that should be a high priority, especially when working with customers.

From a small retail shop to a large manufacturing plant, public liability insurance can help to protect the longevity of your livelihood.

What is Public Liability Insurance?

Public Liability insurance is a type of insurance that is designed to protect individuals and businesses against claims of damage or injury raised by members of the public.

When your business is legally liable for injury or damage to other people’s property, it’s Public liability insurance that covers you from having to pay out potentially huge sums from your own pocket.

Although it is not mandatory in the UK, it is still necessary if you own a business that is in direct contact with the public. Getting sued without being covered will result in paying the high costs of legal fees and compensation.

How Does Public Liability Insurance Work?

If somebody has an accident on your premises or when using your equipment or materials, then public liability insurance is designed to cover the cost of any legal fees you will incur and any compensation that you may need to pay to the victim.

What Does Public Liability Insurance Cover?

Public liability insurance provides coverage in three main situations:

Injuries to members of the public: Imagine that someone tripped on a loose carpet or slipped on a wet floor within your premises. The injury of anyone from the public in similar cases can result in suing you. It is your responsibility as a business owner to make these premises safe to protect yourself from being legally held liable.

Property damage: What if your workers spill coffee on a client’s laptop? Or let’s say your cashier has broken the dear vase that a lady bought from your store. In such situations, there is a potential possibility you will get sued. As a business owner, your premises should be a safe place for the public’s properties. Otherwise, you could be held liable.

Legal expenses: Being held liable means that there are legal expenses to be paid. Whether the dispute is settled in or out of court, you will bear the burden of the legal fees which can be really expensive.

Public liability insurance will save you from worrying about these costs, even if you lose the case. The insurance company will cover the compensation cost for those who got injured or whose property was damaged.

What Are Some Examples of Potential Claims?

Many potential claims could be made against your business. Here are a few examples of these claims:

    • A customer leaves with a broken arm because they slipped on a wet floor. 
  • A loose carpet causes a customer to trip and fracture their hip. 
  • A customer’s laptop is damaged beyond repair because coffee was spilt on it. 
  • A customer knocks a vase and cuts their hand because it shatters.

Such accidents are not considered a form of assault since they were not deliberately caused. However, they can still lead you to court if the court finds that your safety measures are not properly set to avoid such accidents.

For example, not putting signs on slippery floors, or keeping a loose carpet in the middle of a room are considered signs of negligence that are used against you in court.

Possible Defences If Sued By a Member of the Public

Here are a few possible defences you could use If you are sued by a member of the public:

  • You were not negligent: Not all accidents that happen on your business premises are your fault. When a customer trips over their shoelace, you cannot be held liable, since the injury happened because of the customers themselves.
  • The person who was injured was trespassing: when someone is on your property without taking your permission, you will be saved from being legally responsible for any injuries that occur.
  • The person who was injured knew of the risks and chose to accept them: If someone knows that they shouldn’t step on shelves to access higher ones (either through instruction or signage), but if they decide to do this anyway and then injure themselves, this wouldn’t be your fault. .

Calculating How Much Public Liability Insurance You Need

The amount of public liability insurance you need will depend on a few factors:

  • The size of your business: The cost of insurance varies with the size of the business. Having a small business will not cost as much as running a large one. Small businesses usually have less customers, so fewer accidents might take place.
  • The level of public interaction: Running a business that is in direct contact with the public will need more insurance coverage than businesses that the public do not visit much. Chances of accidents are higher in businesses where public interaction is higher.
  • The riskiness of your industry: Industries vary in the level of risks. For instance, a restaurant is more likely to have a higher number of incidents than a stationary shop since risks are higher. At a restaurant, floors are wet at times, and food might cause illness.
  • Your claims history: Businesses with a lot of claims are considered as a higher risk by insurance companies. Therefore, the insurance will cost you more if your past claims were frequent. You should always search for good deals rather than going with the offer that the first insurance company gives you.

How Do You Know If Your Business Needs Public Liability Insurance?

Does your business need public liability insurance? The answer will be best provided to you by an insurance broker. They can assess your business risk level and provide you with guidance to take the best course of action. Any business with public members visiting its premises will need some kind of public liability insurance.

What to Look for in a Public Liability Insurance Policy

To choose the best public liability insurance policy for your business, keep in mind the following things:

The limit of indemnity: This is the maximum amount paid by insurers to cover the expenses of any claim. Before you sign with any insurance company make sure that the amount provided will cover the cost of any possible claim.

The Excess: This is the amount that is not covered by the insurance company. It represents how much money you can contribute to a claim. Since the insurance company will only cover what exceeds this excess amount, you have to make sure that you have enough money to pay for a claim.

The Policy Limit: An insurance policy determines the terms and conditions of your contract with the insurer which mentions the maximum amount covered under the policy. Before you sign your contract with the insurer, make sure the policy limit is high enough to cover potential liabilities.

What Should You Do If Someone Makes A Claim Against You?

If you have an active public liability insurance policy, you should contact the insurance company as soon as anyone makes a claim against you. They will provide you with the advice you need and may even support you in securing legal representation. .

If legal representation is not possible through the insurance company, your next step is to find a solicitor with specialisation in public liability claims. They will help you decide the best course of action after assessing your case.

Now that you have consulted a solicitor, you are supposed to gather enough evidence to back up your case. Potential evidence sources are eyewitnesses, photos, videos, or any similar documentation.

Another important source of evidence is your accident book, a mandatory tool on which you record in detail any accidents that occur on your premises. The accident book is a powerful piece of evidence to support your stand when someone makes a claim against you.

How will the Case be Resolved?

Resolving the case will be discussed with your solicitor who will give you insights into whether it is possible to win the case. Some of the available options are:

  • Settle out of the court: Reaching an agreement on the amount of money you will pay for the person who is suing you before going to court is the easiest way to resolve the case. It is a step that saves you a lot of money and time.
  • Go to trial: your solicitor might see that your case is well-supported, so they may think going to court is the best option. Although it costs more and can be time-consuming, things might end up with paying less money to the person who is suing you.
  • No win no fee: You can agree with your solicitor that they will only get paid if they win the case against the person who made the claim. This is a good option when you do not own enough money to pay for the solicitor.

Other Important Insurance Policies Your Business May Need

Business owners need different types of insurance other than public liability insurance to protect their businesses. These include:

General liability insurance: this type of insurance covers the damage that is caused by you or your employees to other people’s property. If you are a plumber and you break the sink while installing it, your general liability insurance will cover the cost of buying a new sink. Since accidents are unpreventable at times, it is essential to have general liability insurance.

Professional liability insurance: This type of insurance covers the damage caused to clients through your work. For example, if a web developer has faults in designing an e-commerce website that leads to crashing and loss in sales revenues, the website owners might decide to sue the web developer for the loss he caused.

This can also be known as malpractice insurance and it can cover legal fees and compensate for the damage caused by the work of the professional person. If your business provides services to clients that may include the risk of causing financial loss, it is worth having professional liability insurance.

Product liability insurance: This type of insurance covers and compensates for the damage caused by products your business produces. For example, if you manufacture hair care products that have caused an allergic reaction for a customer, you could be sued by the person affected.

Like any other type of insurance, it will support you by paying the legal costs and the compensation for the damage caused. If you manufacture products where something might go wrong, do not hesitate to start product liability insurance.

How to Make Your Business Safe for the Public

There are a few things you can do to make your business safe for the public and reduce the risk of someone making a claim against you. These include:

The safer your business is for the public to interact with, the less chance there will be of having public liability claims made against you.

Here are a few tips to make your business safe for the public:

  • Making sure your premises are well-maintained and safe: to keep your premises safe, regular checking for different types of hazards is a must. The earlier you check, the faster you will identify these hazards and take action to resolve them and save people from getting hurt.
  • Making sure your staff are trained: Your staff should take the safety of the public seriously. They should be well-trained to identify hazards and resolve them before they cause injury or damage to the public. A good team can act quickly and decisively to reduce risks and avoid accidents, so make sure you have a team that can do the task.
  • Having clear signage: Signs are excellent tools to clearly state the rules of your premises and warn the public of any potential hazards. When you use signs correctly on your premises, people will be aware of the risks involved. If a claim is made against you, having clear signs will support your stand since you made people aware of the danger.

Final Thoughts

Investing in suitable public liability insurance is not just a nice-to-have option for wealthy business owners, it’s one of the most necessary policies for all businesses to have in please.

By carefully reviewing the risks of your business on its own, within the industry it operates in and potential exposure, you can find a tailor made policy that offers the protection you need without breaking the bank.

Accidents happen, even if you’ve taken proactive steps, but having the right insurance in place can be the difference between taking a huge financial hit or being able to weather the storm fairly smoothly.

Speak to reputable insurance brokers to find the right insurance for your business and get the right coverage in place, before it’s too late.

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