If your business deals with customers, clients or members of the public, public liability insurance is one of the most important types of cover to understand. Accidents don’t happen often, but when they do, the costs can be significant.
This guide explains what public liability insurance covers, who needs it and how to decide what level of protection is right for your business.
What is public liability insurance?
Public liability insurance protects your business if someone from the public is injured or their property is damaged because of your business activities.
That could be a customer slipping on a wet floor, a contractor damaging a client’s furniture or a member of the public tripping over equipment you’ve left out.
If a claim is made, the insurance can cover legal costs and compensation payments, up to the policy limit.
Who typically needs it?
Public liability insurance isn’t legally required in most cases, but many businesses choose to have it.
It’s particularly relevant if you:
- Have customers visiting your premises
- Work on client sites
- Operate in public spaces
- Attend events or markets
In some industries, clients won’t work with you unless you can show proof of cover.
What it usually covers
Policies differ, but public liability insurance generally covers compensation claims for injury or property damage caused by your business.
This can include legal defence costs as well as any agreed settlement or court-awarded amount.
It doesn’t usually cover claims made by employees, which fall under employers’ liability insurance, or claims related to professional advice, which may require professional indemnity insurance.
How much cover do you need?
Cover levels often start at £1 million and can go much higher.
The right amount depends on your industry and the level of risk. A small, office-based consultancy may need less cover than a construction business working on large sites.
Some contracts specify a minimum level of public liability cover, so it’s worth checking before you choose a policy.
Cost - and what affects it
The cost of public liability insurance depends on factors such as your type of work, turnover, claims history and the level of cover you choose.
Higher risk activities generally mean higher premiums. Keeping good safety practices and a clean claims record can help keep costs manageable over time.
Why it matters
Even a small claim can lead to significant legal fees. Public liability insurance helps protect your business from costs that could otherwise be hard to absorb.
It’s not about expecting problems. It’s about recognising that accidents happen and making sure one incident doesn’t put your business at risk.
