Public liability insurance: do you need it for your business?

Not sure if you need public liability insurance for your business? Sam Humphrey from Insure Our Event explains what you need to know.

What do terms like public liability actually mean? With all the jargon involved in insurance, it can be hard to make sure you’ve got the cover you need.

In this guide to public liability insurance, Sam Humphrey from Insure Our Event has covered everything they feel you need to know, and put it in the most straightforward way possible.

Public liability insurance definition

Public liability insurance covers the cost of legal action and compensation claims that are made against your business.

If a member of the public suffers injury or damage to their property because of your business, they may take legal action even if it isn’t your fault. Public liability insurance will cover you against any legal expenses that are incurred.

What is public liability?

Public liability isn’t always needed, but local authorities, event organisers and local authorities do require it more often than not. It’s available to anyone who runs a business, event or service.

What does public liability insurance cover?

Accidents

HSE define an accident as a separate, identifiable and unintended incident which causes physical injury.

Damage

Property damage is defined and broken down into two parts.

  1. Physical injury to tangible property, where the incident leaves the property in a worse condition than it had been previously;
  2. Lost use of tangible property that is not physically injured.

What does public liability insurance not cover?

Incidents that don’t involve the public usually aren’t covered by public liability. This type of insurance doesn’t cover accident or injury to you or your employees.

Instead, those incidents would be covered by employer’s liability.

What is the difference between public liability and employer’s liability?

Public liability insurance covers claims made by members of the public whereas employer’s liability insurance covers you against employees that have experienced accidents or injury at your business.

If you don’t have staff or employees, for instance if you are self-employed and work alone, employer’s liability isn’t relevant to you.

If however you employ one or more employees, The Employers’ Liability (Compulsory Insurance) Act 1969 requires you to at least have a minimum level of insurance in effect.

Do I need public liability insurance?

In this section, we’ll examine whether your business needs public liability insurance.

Is it compulsory?

It’s not a legal requirement to have public liability insurance, but it is seen as a positive by local authorities. Some authorities or venues will require it for most if not all events.

Why is public liability insurance important?

As a business owner you’re responsible for both your business and the members of public that come into contact with your business or services.

Having public liability insurance protects against financial claims which could otherwise genuinely harm your business. Legal, medical and loss of earnings costs can soon add up, sometimes to the point of potential bankruptcy.

Some serious incidents like falling from height or coming into contact with machinery are fatal.

How much is public liability insurance?

When quoting for public liability insurance, insurers will consider information like:

  • The nature of your business
  • How much cover you want to take out
  • The risk to the general public
  • The size and type of event
  • Previous claims history
  • Good housekeeping

If you speak to your insurance broker, they’ll be able to produce a tailored quote based on your business.


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How much public liability insurance do I need?

There is no definitive answer because the nature and risk of each business is different.

Small business public liability insurance will typically cover from 1 million pounds minimum. However, it is not always suitable to take out the minimum requirement. Cover can be extended to 2, 5 or 10 million and more, depending on the protection required to cover the risk exposure.

The amount of cover you need will also vary on the size of your business and the perceived risk to members of the public.

For example, if you’re hosting a music festival it may be wise to take out a larger amount of cover due to the many risk factors that could cause injury such as alcohol, electrics and weather. Ultimately, it’s best to get as much cover as you can afford – it’s always better to be over than under insured.

What types of event insurance are available?

To ensure a smooth-running event, you’ll want an insurance policy that covers what you need and doesn’t charge you for the cover you don’t. Every event is different, so below we have listed some general tailored insurance packages to give you an indication.

One-off event insurance

One-off events, as the name suggests, are events that have a limited lifetime, like birthday parties, carnivals and charity events.

Most one-off events aren’t high cost, but this can change depending on the event. High risk events, for example, carry a high insurance value because of the increased risk.

Festival insurance

Festival risks are unique, and therefore the insurance policy to cover them has to be unique as well. Out of the million things to consider when organising a festival, insurance can sometimes be the last thing on your mind. But it’s one of the most important things to remember.

Public liability

Depending on the type of festival, public liability insurance can range dramatically in risk and cost. For instance, music festivals are more expensive to cover because of the tendency for drug and alcohol use, as opposed to a small food festival.

Cancellation or abandonment

If you’re hosting the festival outside, you have the added stress of unpredictable weather. Even if you’re hosting a small festival in the UK, you should still consider the risk that adverse weather could have on your event.

Cancellation or abandonment insurance affords you the peace of mind in the event that adverse weather conditions cause the event to be cancelled.

Weather isn’t the only reason a festival might be cancelled. Festival insurance covers a range of social and legal issues that might cause your event to not go ahead. Whatever it is, if it isn’t your fault, it’s likely you’re covered.

Event equipment

Whether your equipment is leased, hired or owned, event equipment insurance protects it from loss, damage or theft during the event.

Band insurance

An injury to your property or a member of the public during a performance can be a real mood killer. After all the preparation, your great performance can turn sour leaving you with a hefty bill from a large claim.

Even if you’re a solo musician you should still consider getting public liability band insurance.  And remember, you don’t need to be playing in a venue to think about protecting yourself from accidental claims. That’s especially true if you’re teaching a member of the public to play music either in public, or in their own home

As a musician, your instrument is your most important piece of equipment. So you may want to look as business equipment insurance as an optional extra with your public liability insurance. This insurance will cover your equipment if it’s damaged or stolen.

Event cancellation insurance

If you’re hosting an indoor gin festival but the venue you’ve booked flooded due to a burst pipe, your event will either be postponed or cancelled. In this case, even with a postponed event some guests may want their money back.

Event cancellation insurance covers lost expenses should your event not take place due to factors outside your control.

But an event doesn’t have to not take place for cancellation cover to be effective. If you’re events are dependent on a  famous or well-known person making an appearance, non-appearance insurance protects you in the event they can no longer make it.

Paying guests can claim for at least their money back, should a key person used to attract and generate ticket sales not appear at the event. In this instance you’ll need event cancellation insurance to cover you.

Multiple event insurance

Multiple events insurance is specialised insurance for businesses hosting more than one event. Instead of insuring each individually, if they’re all similar types of events, one policy can help streamline the process. And they’re often discounted versus the cost of insuring each event.

Multiple events insurance can be tailored to exact event requirements, but as a general rule they’ll include both public and employer’s liability cover. To qualify for multiple events insurance, the event must be a repeat (such as a mud obstacle event) where the event carries the same risk each time and they can’t be any longer than three days.

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