Public Liability Insurance

The essentials of public liability insurance

Any owner running a business whether large or small faces the task of risk management, because there are elements of risk involved in all businesses that can affect and have an impact on the public and on the customers that business serves. Although not mandatory in the UK, most business owners manage a good deal of the risks involved in running a business by having adequate Public Liability Insurance.

It's simply good business practice for a business owner to have Public Liability Insurance. Even though it's not mandatory, many hiring companies will usually require that a business have proof of Public Liability Insurance before allowing any work to begin on their property.

A Public Liability Insurance policy covers a business from injuries, accidents or property damage that a member of the public or third party may incur whilst on or around a job site. Public Liability Insurance covers hospitalization and other medical expenses related to an accident, and compensates for lost wages and potential loss of future earnings of a claimant. It can also protect a business owner against any costs incurred for his defence including potential investigations and possible settlement payments. It is not meant for employees as this is a separate Employers' Liability Insurance coverage all employers must have.

Self-employed business owners working out of their home may need Public Liability Insurance, particularly if clients regularly visit the owner's home to conduct business. If a client falls and is injured, it's better to be protected with insurance to cover these types of mishaps that may warrant a claim be filed. If a business owner works out of his home as well as on a job site, a Public Liability policy should cover both situations.

Self-employed tradesmen and small business owners can purchase cover for, for example, £1 million, £2 million and £5 million. Most, to be on the safe side, will often go with more cover rather than less. It's good to have peace of mind knowing that should an accident or damages occur as a result of the activities of the business, any compensation claims and legal fees will likely be covered by a Public Liability policy so will not bring down the business!

Premiums for Public Liability Insurance depend on the business and how many employees the business has. Any company hit with a series of mishaps that affect more than one person will likely use up a £1 million in legal fees and claims in no time at all. That is why it is always best to carefully consider the amount of cover necessary to meet a company's needs. It's also important to keep policies updated. Risks grow when a company expands, and it's crucial to make sure that a policy reflects the changes.

Public Liability Insurance Exclusions

Public Liability Insurance does not necessarily cover all losses. If the damage or injury caused to a third party was claimed to have been brought on by an intentional and illegal action by an employee, this is generally considered unacceptable behaviour, and any claim for loss will often be denied. As noted, Public Liability does not cover employees of a business. This coverage is provided by Employers' Liability Insurance, which is mandatory in the UK.

Public Liability Insurance Property Damage Examples

A plumber installs water pipes in a home that subsequently leak causing damage to several areas of the home. This is a property damage claim that will most likely fall under the plumber's Public Liability policy. Another example could be an electrician causes a fire because of improper wiring on a job. A fire occurs and there is damage to a home and its contents. In most cases, the electrician's Public Liability should cover the damages.

Public Liability Insurance Bodily Injury Examples

A plumber installs a hot and cold water valve improperly, and a homeowner is burned by hot water because of the improper installation, or a plumber forgets tools on the job and a client trips on the tools and breaks an arm. In both cases, bodily injury claims would probably be covered under the plumber's Public Liability Insurance plan.

Costs, Legal Fees and Other Expenses

In most cases, legal action filed in court directed against a business will most likely be handled by the owner's insurance company. A barrister is appointed to represent the business and defend the lawsuit. All expenses and legal fees will most likely be paid by the insurance company, as may an award or settlement ruled against the business up to the amount of cover the business has taken out.

Without Public Liability Insurance, a business could be responsible to pay for any judgment against them and all legal fees and additional expenses. This could put a company out of business if there is no insurance in place.