At some stage in their day-to-day activities, most businesses come into contact with members of the public in one way or another. Companies have a duty to ensure these interactions are safe and well-managed. Where they lead to accidental injury, death, disease, illness or property damage, public liability insurance can help pay for the resulting legal costs and compensation.
Who needs public liability insurance?
Any business that comes into contact with people who are not employees has a potential need for public liability insurance.
Perhaps you are a retailer and so people come in and out of your shop all day long. Do you have commercial premises that customers and/or suppliers visit? Maybe you work from home and have clients coming to the house for meetings? Are you an event organiser bringing lots of members of the public together?
You also have to think about where you and your employees go during the working day. Are you out and about on business, mixing with other people? Are you visiting other companies’ offices or delivering goods to people’s homes?
If your business, or any of its employees, come into contact with third parties whilst carrying out their business duties, either on-site or off-site, then you have a responsibility to make sure these activities do not lead to third parties being injured or their property damaged.
Where this happens, they may be able to make a claim against your company for compensation. This is where public liability insurance can help.
Most firms are not required by law to buy public liability insurance, although some such as horse-riding establishments are obliged to have cover. Some commercial contracts may also stipulate that you have public liability insurance in place.
What does it cover?
Public liability insurance provides cover to help pay for the cost of defending claims against your business from third parties and for any resulting compensation.
Where your business fails in its duty to safeguard third parties and their property, the insurance is there to help meet the costs of claims relating to accidental injury, death, disease or illness, and for any loss of or damage to property, for which your business is deemed responsible.
For example, a shopkeeper mops the floor, but does not alert customers that the tiles are wet. Someone slips and injures themselves and makes a claim against the company. Or perhaps your firm has put on an event and a small marquee collapses, hurting a number of people inside. Maybe you’re visiting a customer’s offices and you bump into and break an expensive ornamental display.
Public liability insurance can also help to cover the losses that come directly from the accident or injury in question. For example, your shop sign falls onto and damages a customer’s car. The insurance can help with the costs of the required repairs.
There is no set limit for the amount of cover your business will need. The limit of indemnity you chose and the premium you pay will rely on factors such as what your business does, who your customers are, the number of staff and locations you have, and your previous claims history.
>See also: What is professional indemnity insurance?
Does public liability insurance cover claims against your business arising from Covid-19?
Covid-19 has had a profound and devastating impact on people and businesses throughout the UK and the wider world.
National governments within the UK have set out operating requirements for businesses to meet as they cope with the threat of the virus and these have changed throughout the pandemic. Businesses have a responsibility to meet these requirements as they stand now and as they evolve into the future.
In exactly the same way as a member of the public could catch a disease such as measles, mumps, a common cold or flu from anyone on your premises, they could also catch a respiratory disease like Covid-19. One of your employees may pass the virus onto a third party whilst visiting their home or office whilst employed by you to carry out your business.
The cover provided by a public liability policy can protect you if a third party makes a claim alleging that your business has failed in its duty to safeguard third parties against injury or illness arising from Covid-19.
In a more litigious world, it is not unusual for businesses to find themselves subject to claims from third parties. Whether or not you’re at fault, defending such actions takes time and money. It’s also true that even the best-run businesses suffer accidents, which lead to third parties getting injured or their property damaged.
Public liability insurance can help cover the costs of dealing with such claims and is an important consideration for those coming into contact with the public in their day-to-day operations.
Edward Murray is a financial journalist who has written for The Daily Telegraph, The Guardian, The Daily Mail, The Scotsman and Scotland on Sunday