Public Liability Insurance for Your Small Business


Many business owners don’t take the time to understand public liability insurance, and could face liquidity challenges for damages if their policy proves to be insufficient for their needs. Public liability insurance is the most common type of insurance required by small businesses.

This insurance protects you if clients or members of the public suffer personal injury or property damage because of your negligence. It covers the costs of subsequent legal expenses or compensation claims and is an important insurance policy for businesses that interact regularly with customers. Even a simple, non-serious accident – such as a customer tripping over a trailing cable in your shop and breaking their ankle – could lead to financial claims big enough to bankrupt you.

If your business were deemed liable for an incident like this, it is likely you would have to pay compensation for the distress and inconvenience experienced by the person who was injured, as well as cover legal costs. All in all, you could face a bill potentially huge enough to put a small firm out of business.

Do I need public liability insurance?

While public liability insurance is not a legal requirement for some businesses, it should be considered essential if members of the public interact with your company in any way – from customers receiving deliveries to clients visiting your office or work premises. This means that even home-based businesses should consider public liability insurance if their home office is also used as a meeting place.

However, it is considered an essential among business owners, and in some professions you may find it impossible to trade without it. For example, clients may stipulate that you must have a minimum level of public liability insurance in place before you can work for them. If you wish to undertake public sector contract work, you will almost certainly need public liability cover.

Whether you are a nanny, a professional musician, a DJ or even rent out bouncy castles for a living, there are good reasons for you to consider purchasing public liability insurance cover.

Public liability insurance usually provides cover for:

  • Compensation for claims for injuries to a third party or damage to their property, whether an incident takes place on your business premises, a customer’s premises or elsewhere
  • Legal expenses you incur
  • The cost of repairing damage (for example, to a client’s carpet if you are a plumber and do something in the course of your work which causes a flood)
  • The cost of hospital treatment (including the cost of calling out an ambulance),
  • Any other expenses deemed reasonable.

It is up to you to decide how much public liability cover you need to put in place, depending on the nature of your business and how much it is worth. Many public liability insurance policies offer cover from $ 20,000 to $10m for small and medium-sized enterprises.

What are the general costs?

The public liability insurance is one of the cheapest insurances found in Insurance Markets. As a guideline below are the annual premiums at various levels of limits of liability:

Limit of Liability                                                    Annual Premium

$ 50,000                                                                $   78.75

$ 100,000                                                              $ 157.50

$ 150,000                                                              $ 315.00

These premiums are indicative and upon assessment of the level of risk exposure the premium can be lower or higher.

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