Public Liability Insurance Guide: What It Covers and Why

What is public liability insurance?

Public liability insurance provides cover if a member of the public, or another third party such as a client or supplier, is injured or has their property damaged as a result of your business activities and decides to make a claim against you. It typically covers compensation costs and associated legal fees, up to the limit stated in the policy.

This type of insurance is relevant to almost any business that interacts with the public or visits other people's premises, from tradespeople working in customers' homes to shops, cafes, and event organisers. It exists to protect the business financially from the potentially significant cost of defending or settling a liability claim.

Who needs it?

While public liability insurance is usually not a legal requirement in the UK, unlike employers' liability insurance, many businesses choose to have it because of the financial risk a claim could pose. Tradespeople, retailers, hospitality businesses, event organisers, and anyone who regularly interacts with clients or the public in person often consider it an essential part of running their business.

Some clients, landlords, or event venues require proof of public liability insurance, often to a specified minimum level, before allowing a business or contractor to work with them or on their premises. Even sole traders working alone can benefit from cover, since a single claim could otherwise represent a significant financial burden.

What's covered and what's excluded

A public liability policy generally covers compensation for third-party injury or property damage arising from your business activities, along with related legal costs in defending a claim. This might include, for example, a customer slipping on a wet floor in a shop, or a contractor accidentally damaging a client's property while carrying out work.

It typically does not cover injuries to your own employees, which fall under employers' liability insurance instead, nor does it usually cover damage to your own property or equipment, professional advice or services (which may need professional indemnity insurance), or deliberate acts. Each policy has its own specific exclusions, so it's worth checking the wording carefully, particularly around activities that might be considered higher risk.

• Third-party injury claims arising from your business activities
• Third-party property damage claims
• Legal costs in defending a covered claim
• Employee injuries are excluded (covered instead by employers' liability)
• Professional advice errors are typically excluded (covered instead by professional indemnity)

What affects the price

The cost of public liability insurance depends on factors such as the nature of the business, the level of cover chosen, the number of employees or contractors, annual turnover, and claims history. Businesses involved in higher-risk activities, such as working at height or using specialist equipment, may see this reflected in the premium compared to lower-risk office-based work.

The level of indemnity selected, commonly offered at tiers such as £1 million, £2 million, £5 million, or £10 million, also affects the price, with higher limits generally costing more. In some cases clients or contracts may specify a minimum required limit, and a specialist broker can explain what level of cover is typically considered for different types of work.

Tips for choosing cover

Check whether any clients, landlords, or trade bodies you work with require a specific minimum level of public liability cover, as this can determine the appropriate limit of indemnity to select. Be accurate when describing your business activities to an insurer, since undisclosed higher-risk activities could affect a future claim.

If your work takes you to different locations or client premises, make sure your policy reflects this rather than assuming cover only applies at a fixed business address. It is also worth reviewing your cover periodically as your business grows, to check the limit of indemnity remains appropriate for your level of activity and risk exposure.

How to get a quote

If you're considering public liability insurance for your business, you can fill in a short form with some basic details, and a specialist broker will be in touch to discuss suitable levels of cover. There is no obligation to proceed, and comparing options can help you understand what's typically available for businesses like yours.

Frequently asked questions

Is public liability insurance a legal requirement?

No, public liability insurance is generally not a legal requirement in the UK, although many clients, landlords, and venues require it as a condition of working together.

How much public liability cover is usually available?

Common limits include £1 million, £2 million, £5 million, and £10 million, and some clients or contracts specify a minimum. A specialist broker can explain what's typically considered for your type of business.

Does public liability cover my own injuries?

No, public liability insurance covers claims from third parties, not injuries to yourself. Personal accident cover may be more relevant for your own injuries.

Do I need public liability if I work from home?

It can still be relevant if clients or the public visit your home or if your work takes you to other locations, so it's worth considering even for home-based businesses.

Does it cover damage I cause to a client's property?

Yes, accidental damage to a third party's property caused by your business activities is typically covered, subject to the policy's terms and exclusions.