Public liability insurance is very important because it protects businesses from being sued for negligence. If a customer or member of the public is injured or their property is damaged because of your business, they could sue you, and public liability insurance would cover the cost of legal fees and any compensation you may have to pay.
If you run a business that regularly deals with the public, you may be wondering how much public liability insurance you need.
In this article, we will explain everything you need to know about public liability insurance in the UK, what it covers, how to calculate how much you need and what to do if somebody makes a claim against your business.
What is Public Liability Insurance?
Public liability insurance is a type of insurance that can protect you in the event that a member of the public gets hurt or their property is damaged as a result of your business. It is not mandatory in the UK to have public liability insurance, but it is highly recommended, especially if your business deals with the public on a regular basis because the cost of legal fees and compensation can be very high if you are sued.
How Does Public Liability Insurance Work?
If someone makes a claim against your business, public liability insurance will cover the cost of legal fees and any compensation you may have to pay. The legal system takes injuries to the public very seriously so it is important to have this type of insurance in case something goes wrong.
What Does Public Liability Insurance Cover?
Public liability insurance covers three main things:
- Injuries to members of the public: If someone is injured as a result of your business, they could also sue you. This could include slipping on a wet floor or tripping over a loose carpet. As a business owner, you are supposed to ensure that your premises are safe for the public so if someone is injured, you could be held liable.
- Property damage: If a member of the public damages their property as a result of your business, they could also potentially sue you. This could include things like spilling a drink on their laptop or knocking over a vase. Again, the public is supposed to be able to use your premises without damaging their property so if they do, you could be held liable.
- Legal expenses: If you are sued for either of the above, you will also have to pay legal fees. These can be very expensive, especially if the case goes to court. Public liability insurance will cover these costs so you don’t have to worry about them. In the event that you lose the case, the insurance company will also pay any compensation that you may have to pay.
What Are Some Examples of Potential Claims?
There are many potential claims that could be made against your business, but here are a few examples:
- A customer slips on a wet floor and breaks their arm.
- A customer trips over a loose carpet and fractures their hip.
- A drink is spilt on a customer’s laptop and it is damaged beyond repair.
- A vase is knocked over by a customer and it shatters cutting their hand.
Even though none of these accidents was caused deliberately, you could still be sued if the court finds that they could have been avoided if you had taken the appropriate steps. For example, you should have put a sign out telling customers that the floor was wet.
Possible Defences If Sued By a Member of the Public
If you are sued by a member of the public, there are a few possible defences that you could use:
- You were not negligent: If you can prove that the accident was not your fault and that it was caused by the actions of the person who was injured, then you will not be held liable. For example, if a customer trips over their own shoelaces, you cannot be held liable.
- The person who was injured was trespassing: If the person who was injured was on your property without your permission, then you will not be held liable for any injuries they sustained.
- The person who was injured knew of the risks and chose to accept them: For example, if a customer chooses to stand on a chair to get the attention of a waiter in your restaurant, you cannot be held liable if they fall and injure themselves.
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: A small business will usually need less insurance than a large business. This is because a small business is less likely to have as many customers and so the chances of an accident happening are smaller.
- The level of public interaction: If your business has a lot of contact with members of the public, you will need more insurance than a business that doesn’t. This is because there is a greater chance of an accident happening if there is more interaction.
- The riskiness of your industry: Some industries are riskier than others. For example, a restaurant is more likely to have incidents than a stationery shop because there is more potential for accidents (e.g. someone slipping on a wet floor or eating poorly cooked food.)
- Your claims history: If you have made a lot of claims in the past, you will be seen as a higher risk and so will need to pay more for your insurance. This is why you should always shop around to find the best deal and not just go with the first insurer you find.
How Do You Know If Your Business Needs Public Liability Insurance?
If you are not sure whether your business needs public liability insurance, you should speak to an insurance broker. They will be able to assess your business and advise you on the best course of action. Generally speaking, most businesses will need some form of public liability insurance if they have customers or any other members of the public visiting their premises.
What to Look for in a Public Liability Insurance Policy
When you are looking for a public liability insurance policy, there are a few things you should keep in mind:
The limit of indemnity: This is the maximum amount that the insurer will pay out for any claim. You should make sure that this is high enough to cover the cost of any potential claims.
The excess: This is the amount of money that you will have to pay towards any claim. You should make sure that you can afford the excess in the event of a claim.
The policy limit: This is the maximum amount that the insurer will pay out under the policy. You should make sure that this is high enough to cover all of your potential liabilities.
What Should You Do If Someone Makes A Claim Against You?
If someone makes a claim against you, the first thing you should do is contact your insurance company. They will be able to advise you on what to do next and may even provide you with legal representation.
If the company doesn’t provide your legal representation, the next step is to find a solicitor who specializes in public liability claims. They will be able to assess your case and advise you on the best course of action.
Once you have spoken to a solicitor, you will need to gather evidence to support your case. This may include witness statements, photos, and any other relevant documentation. Every UK business should have an accident book which details any accidents that have happened on their premises. This will be an important piece of evidence if someone makes a claim against you.
How will the Case be Resolved?
You then have a few potential options depending on whether your solicitor thinks you are likely to win the case. These options are:
- Settle out of court: This means that you and the person who is suing you come to an agreement on the amount of money that they will receive. This is usually done before the case goes to court and can save a lot of time and money.
- Go to trial: If your solicitor thinks you have a strong case, they may advise you to go to court. This is a more expensive and time-consuming option, but it could result in the person who is suing you receiving less money than they would have if you had settled out of court.
- No win no fee: This means that you only have to pay your solicitor if they are successful in getting you money from the person who is suing you. This can be a good option if you do not have a lot of money to pay upfront.
Other Important Insurance Policies Your Business May Need
As well as public liability insurance, there are a few other types of insurance that you may need to protect your business from different risks. These include:
General liability insurance: This covers you for any damage that you or your employees may cause to other people’s property. For example, if you are a carpenter and you accidentally knock over a vase in someone’s home while you are working, your general liability insurance will cover the cost of repairing it. This is important because accidents can and do happen, even if you are taking all the necessary precautions.
Professional liability insurance: This is also known as malpractice insurance and covers you for any damage that you may cause to your clients through your work. For example, if you are a lawyer and give your client bad advice that leads to them losing a lot of money, they could sue you for damages. Professional liability insurance would cover the cost of your legal fees and any damages that you may be ordered to pay. It is particularly important for any businesses and industries where there is the potential for clients to suffer financial loss.
Product liability insurance: This type of insurance covers you for any damage that your products may cause. For example, if you are a manufacturer and one of your products causes injury or property damage, you could be sued by the person who was affected. Product liability insurance would cover the cost of your legal fees and any damages that you may be ordered to pay. It is important for any business that sells products, as there is always the potential for something to go wrong.
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:
- Making sure your premises are well-maintained and safe: This means regularly checking for trip hazards, electrical hazards, and other potential dangers. It is important to identify these hazards at the earliest possible opportunity and take steps to resolve them so that people do not get hurt.
- Making sure your staff are trained: This means ensuring that your staff know how to deal with the public safely and correctly. They should also be aware of any potential hazards on your premises and how to resolve them. Many accidents can be avoided with swift and decisive employee action so make sure your team is up to the task.
- Having clear signage: This means having signs that clearly state the rules of your premises and any potential hazards. This will help to ensure that people are aware of the risks before they enter your premises. It will also help to cover you if someone does get hurt on your premises as they will have been made aware of the danger.
As you can see, the answer to how much public liability insurance is needed is not a simple one. There are many factors to consider when trying to calculate the amount of cover you need, such as the size of your business, the level of public interaction, and how risky your industry is. The most important thing is that you ensure your business is covered against any eventuality because accidents can happen.