Are you looking to set up a small business? Will there be interaction between your business and members of the general public?

If you answered ‘yes’ to those questions, it’s very likely that you’ll need to get public liability insurance before you start trading. Public liability insurance will cover you for legal costs, compensation and property damage caused by your business.

Businesses of different types and sizes will require different insurance policies, which is why it’s important to do your research beforehand. Some businesses may need cover up to £1 million, while for others, £5 million may be necessary. There are also different aspects of your business which can be covered, such as equipment, but this will depend again on the type of business you have.

There are several misconceptions when it comes to public liability insurance. Many owners of small businesses believe that they do not need insurance if they are working from home; however, this is not the case. If customers walk into your home for a meeting, for example, and trip over the rug, they have every right to sue your business for damages. If you deliver some documents to a client’s home and accidentally scratch the car on your way down the path, you could find yourself in court.

Public liability insurance helps to give every entrepreneur the peace of mind they need in order to operate their business efficiently.

Why do I need public liability insurance?

In the United Kingdom, businesses are not required by law to have public liability insurance. However, it is strongly advisable to take out an insurance policy for your business as soon as possible. You won’t get into trouble with the law if you don’t purchase insurance, but if any harms comes to a member of the public or property as a result of interacting with your business, you could find yourself out of pocket. Without insurance, you will be forced to pay any expenses from your own savings.

Small and large businesses alike should take out insurance policies. Large businesses with several employees and lots of public interaction will pay more for insurance, since there is a higher chance of an accident occurring. Small businesses generally have lower annual insurance costs, particularly if they are being operated from offices and involve limited interaction with customers.

If any type of accident occurs between your business and a customer, the public liability insurance will cover any costs which are involved with the claim. This means that you won’t have to worry about paying large fees and expenses. If you are making the claim, you will need to pay the excess, which will usually range from £250 to £1,000. The excess amount will be set at the time you take out the policy, so this initial payment won’t come as a surprise to you.

How can I get public liability insurance?

In order to get public liability insurance, the insurer will need to take some details about your business. You will need to provide the type of business you’re running, the location of your business and information about any employees you may have. Some businesses will pay more for their insurance; for example, the price of a builder’s public liability insurance will generally be higher than the insurance of a wedding planner.

When you contact an insurer to get a quote, they will build a suitable insurance plan around the details which you have provided. They should be able to tell you the value of cover you need for your business, and will also be able to adjust the amount of excess you pay in the case of any claims.

What should I look for in public liability insurance?

It’s important not to simply choose the cheapest quote, but to look at which insurer provides you with the best level of cover. One insurer might seem a lot cheaper, but if they don’t provide cover for legal expenses, you could find yourself paying out thousands of pounds if any accidents occur which end up in court.

The first thing you should note is the level of public liability cover which is provided. Good insurers should be able to advise you which level is best for your business. This normally ranges from £100,000 to £5 million.

Next, look at the cover for legal fees and expenses. If a dissatisfied customer takes you to court over an unfortunate scenario, you won’t have to pay for a lawyer or any other fees associated with the case. The insurance policy will cover these expenses up to the amount which you’re covered for (usually £10,000 to £1 million).

You should then look at anything else which you can get cover for, such as tools for your business or equipment for your office. You should select the level of cover based on the value of the equipment. If your tools are worth £5,000 and you choose £1,000 cover, this means that if your tools are stolen or damaged, you will only be able to claim a maximum of £1,000. Although choosing a higher amount of cover might slightly increase the annual premium cost, it’s important to remember that insurance is all about having a safety net in the case of an accident.

Note: Public liability insurance does not cover your business for any accidents or injuries related to your employees. If you are employing people to work for your company, you will need to get employers’ liability insurance.

How much will public liability insurance cost?

The amount you pay will depend on the type of business you have, how much cover you require and what exactly you want to cover. For example, a sole trader in the building industry will pay approximately £300 per year for cover up to £1 million. A children’s entertainer and/or party planner will pay around £90-£100 per year for the same level of cover. The latter profession is considered less risky than the former, hence the large different in the cost of the annual premium.

Whether you’re thinking of setting up a business or you’ve been running your own company for the past few years, don’t wait any longer to get a public liability insurance quote.