Public liability insurance - all you need to know

This article is provided by Simply Business

Public liability insurance is at the centre of most business insurance policies, and it’s a cover that many clients will check you have in place before taking you on for a project.

From a tradesman who drops a tool and damages a customer’s floor, right up to a more serious accident, this insurance can cover a range of businesses from everyday risks.

What is public liability insurance?

Public liability insurance is the business insurance that’s top of the list for most construction workers or tradesmen, as it can help your business if you’re sued by a member of the public for injury or damage.

It’s one of the main types of business insurance, and it can be useful for any business that comes into contact with third parties, whether that’s customers, clients, suppliers or passersby.

What does public liability insurance cover?

Public liability insurance can cover the legal and compensation costs if your business is sued for injury or damage.

For example, a site manager visits a client’s office and spills a coffee over expensive computer equipment, or a tradesman is working on scaffolding and drops a tool that damages a car parked below. In cases like these, the person who has suffered injury or damage could make a compensation claim against the business. Compensation claims can be very costly, so public liability insurance is an important protection.

Do I need public liability insurance?

You’re likely to decide you need public liability insurance because your business comes into contact with members of the public. This could be because customers visit your premises, you visit client sites, or because you work in public.

This means that public liability insurance can be particularly important for construction businesses and tradesmen.

Is public liability insurance a legal requirement?

Public liability insurance is not a legal requirement. However, public liability insurance may be required by your client contracts, and some regulators and membership bodies require their members to have certain insurance cover in place.

How much public liability insurance do I need?

Your cover level is the maximum amount your insurer will pay out in the event of a claim. The amount of public liability insurance you take out is up to you, although check if your client contracts require a particular level of cover. In particular, government and local authorities usually require suppliers to have between £5 million and £10 million of cover.

Most insurers (including Simply Business) offer between £1 million and £10 million of public liability insurance. When you’re deciding how much you need, think about the scale of the work you do and the possible size of compensation claims if something went wrong.

Is public liability insurance tax deductible?

Public liability insurance counts as an allowable business expense, so it is tax deductible. When you’re completing your tax return, you can subtract the cost of your public liability insurance from your income when you’re calculating your taxable profits.

Buying public liability insurance

You can buy your public liability insurance on its own or as part of a comprehensive business insurance policy, including other key covers like employers’ liability insurance, professional indemnity insurance and buildings insurance.

Decided it’s time to look a bit further into public liability insurance? Compare quotes with Simply Business, the UK’s largest insurer for small businesses, with over 400,000 active policies.

This article is provided by Simply Business