Businesses always have the responsibility to ensure that they’re safe environments for clients, customers and any other third party, but it can sometimes be difficult to foresee things going wrong. Public liability insurance is a way to defend your business if something does go wrong and protect it from having to pay significant sums of money to claimants. Find out more about public liability insurance, how it works and how you should compare the best policies in this comprehensive guide.
Public liability insurance is a type of business insurance that protects businesses from third party claims made against them due to injury or damage sustained to their property. Specifically, this refers to the physical structure and property owned and operated by your business, rather than the services you provide. These are most likely to come from customers/clients, suppliers or members of a separate business completing work at your location or simply a passer-by or non-customer who happens to be in the vicinity.
Claims of this nature can be incredibly costly, particularly to small businesses who don’t otherwise have a high turnover or a substantial amount of money with which to pay for damages or contest them in court. Businesses have a duty of care towards their customers and other third parties that must be upheld when they enter the premises; namely, that they cannot allow people to be injured or suffer damage to their property.
There are several key areas that public liability insurance covers businesses for in the event that a claim is made against them. The primary forms of coverage lie in the following areas:
Legal liability for injury or death
Perhaps the most important area for a business to be covered for is legal liability in the event that a third-party claim is made against you due to injury or death taking place on your business’ premises, or incidents otherwise caused by members of your business. This means that your legal costs will be taken care of by your insurance policy if a claimant pursues damages in court against you for any injury or death sustained. Public liability insurance can also cover business owners in these situations for any costs associated with first aid or further medical expenses required to treat injuries on the scene. An example of this might be if a light fitting falls from your ceiling and strikes a patron, causing cuts, bruising and concussion, although it could be as simple as a customer slipping on a wet floor and hurting themselves.
Legal liability for damage to third party property
Similarly, your legal liability for damaging someone’s property will be covered under your public liability insurance policy. In the same way as it does for injury or death, public liability insurance covers the legal costs associated with both defending a case or those deemed payable to a claimant. You may also find that goods or items that are in the care of your business, but aren’t owned by you, will be covered for damage and any related expenses, although this might only be as an optional extra. An instance of damage to property could include if a DJ’s sound system were short-circuited and ruined due to a spill near a power socket; in this situation, you could expect to be pursued for compensation.
Legal liability for others acting on behalf of the business
It doesn’t have to be the business owner or its physical structure that causes injury to a third party or damage to their property; public liability insurance covers other people that might be working for your business at the time of the incident. This means that if an accident is caused, or deemed to be caused, by anyone from a lower-level employee all the way up to a director or executive, your insurance policy will cover their legal liability. An example of this may be an employee fixing something on a high shelf and knocking a heavy item down onto a passing patron.
However, you’re likely to come across exclusions that you should always be acutely aware of when it comes to public liability insurance. Make sure that you know about the exclusions on your policy so that you’re not left wholly underprepared if it fails to cover them. Some of these include:
Pollution: if you have a gas leakage in your business that is gradually making the air less breathable and potentially harmful, you won’t be covered by your public liability insurance policy.
Asbestos: similarly, the presence of asbestos as a cause of a claim won’t be deemed a satisfactory reason for an incident taking place.
Negligent behaviour: if the actions leading to a claim against you are deemed by a court to be careless or negligent and are charged extra fees as a result, your insurance policy won’t cover it.
Aircraft: if your business receives a claim regarding an aircraft that you operate, it’s likely to only be covered by further aviation insurance rather than your existing public liability insurance.
Like other types of business insurance, there are plenty of ways in which you can compare one quote with other public liability insurance policies. Some of the most important of these include:
Cost of premiums
You can save a significant amount of money over time by opting for a cheap public liability insurance policy over another, especially if you’re getting the same or similar deal in terms of coverage. This can make a real difference in the long run, particularly if your business is tight on funds. Remember, though, that your decision on which policy to buy shouldn’t be informed solely by the respective costs of your options: a cheap public liability insurance policy won’t always be the best.
This is the area you should be most interested in as a business owner when selecting between public liability insurance policies. What is of utmost importance is that your business is covered in all the areas that it needs by your policy. This is relevant because not all policies will provide adequate cover, or indeed cover at all, in the same areas, meaning you’ll have to keep your eye out for those which meet your business’ needs. Paying more for your insurance than you should is never ideal but being underinsured when you need it most could be much worse.
This also feeds into the coverage, but it’s important to familiarise yourself with the optional extras offered by your insurer on a public liability insurance policy. These could be in areas that are useful to your business that you may not otherwise be covered for, such as theft, portable equipment or tools, glass breakage and more. You may feel that it’s necessary to provide yourself with coverage in these areas and pay that little bit extra for them, but it’s valuable to be afforded the opportunity to elect not to take up coverage options that your business won’t need and save money along the way.
Maximum benefit amount
Policies will also differ in terms of the amount of money that they’d be willing to cover you for. Benefit limits are generally quite high with public liability insurance quotes, as they often relate to injury, death or valuable damaged property, but you might need more than some insurers are willing to provide. Generally, you’ll get the choice to insure your business for an amount between $5 million and $20 million, so take this into consideration when deciding on which insurer to go with.
Each business will have different risk profiles in the eyes of insurers depending upon the nature of the business they conduct. This is likely to play a major role in shaping the cost of your business’ public liability insurance premiums as a result. An example of this may be that a construction company which operates heavy duty machinery is generally considered at higher risk than an accounting firm for a claim. Also, some operating premises are deemed higher risk than others, such as airports and construction sites, which will further impact the cost of premiums.