In the course of running a business, it is often a necessity for both you and your staff to come into contact with the general public. Legally, we owe a duty of care to ensure the safety of these people and their property. If a negligent act were to cause harm to an individual or their belongings, that person is entitled to compensation from the business. Given the cost of a claim and the unpredictable nature of accidents, it is important for every business to protect themselves with public liability insurance.
Public Liability Insurance – What It is
When a member of the public files a claim against your business, public liability insurance covers both the legal and medical bills associated with the lawsuit. Typically this includes expenses owed to the NHS for care, including the cost of an ambulance ride. If the claim is awarded to the injured party, the insurance will also cover the cost of the compensation.
As the cost of legal, medical, and personal hardship can escalate rather drastically, most businesses are unable to cover these costs on their own. In fact, most public liability policies start at a minimum of £1 million, with increments of £5 and £10 million policies depending on your level of risk.
Value of Insurance Versus Cost and Risk
Most insurance policies require your business to pay a monthly premium. The amount will vary widely depending on the risk of insuring your business, your previous claim history, and the amount of cover you wish to purchase. Generally, this amounts to a low risk trade of approximately £50.00 a month in exchange for millions in protection and peace of mind.
Costs can be further minimised by putting in safety measures or training courses to limit your perceived level of risk. You can also institute a high excess to lower your premiums. However, be sure you can pay the excess if a claim were to arise before you commit to such a decision.
The other advantage of having public liability insurance is the assurance it provides clients if something were to go wrong. Many customers many not deal with a business that is not insured, especially if the work involves expensive computer or electrical systems where an accident can cripple a company.
What Constitutes Liability
Of course, injury or damage to property does not necessarily mean your business is liable. According to the law, certain facts must be established before an accident can be considered negligent.
- A duty of care was owed to claimant.
- The business failed to exercise that duty of care.
- The claimant suffered a loss which was a direct result of breaching that duty of care.
What Public Liability Does Not Cover
A common misconception regarding public liability insurance is that it covers lawsuits filed by employees. For that, a separate policy called Employers’ Liability Insurance is required. Many policy providers will bundle the two policies together in order to lower costs.
It is also important to take note of the small print. Not every eventuality is covered by a public liability policy. Insurers often work to research your business and limiting their exposure to certain activities. In other cases, they may offer a general template for your business type that does not meet the unique risks of your business.
Be sure to consult with an agent and go into detail over which scenarios are covered, as well as areas where the cover may be unnecessary. Adapting the insurance to the demands of your business will mean a cheaper and more effective coverage.
You can find many public liability packages through online comparison sites, regardless of the type of business or trade you specialise in. This is an excellent way to find competitive quotes based on independent research. However, it is always wise to make sure the company you deal with is a member of the Association of British Insurers (ABI) before proceeding with a policy.