What is Public Liability Insurance?
In this article, we will explain what a Public Liability insurance policy covers, answer some general FAQs that we often hear and show some claim examples in order to provide a general understanding of this type of insurance.
Public Liability Insurance (often referred to as PL) is generally one of the most bought insurance policies for businesses. It covers a business against claims and legal costs from members of the public (such as a customer or supplier). The type of claims that are covered under Public Liability are third party property damage and bodily injury.
Is Public Liability a Legal Requirement?
No. Public Liability policies are not legally enforced by the government on businesses - it is up to the proprietor if they wish to purchase this type of insurance. It’s taken out by businesses that come into contact with the general public. For example if you run a gymnasium and members of the gym use the premises on a daily basis, there is a risk of injury, which PL will cover the business for in the event of this type of claim.
What limit of Public Liability does a business need?
This depends on the type of industry you are in and the level of risk involved. Activity Business Cover can arrange PL policies ranging from £1,000,000 to £10,000,000 depending on your requirements. Some companies will have contractual obligations that require them to have a £10m PL limit. There is no set requirement but generally businesses will have a £5,000,000 limit of indemnity. Coverage levels that can be arranged - £1m, £2m, £5 and £10m.
How much does a Public Liability Insurance policy cost?
There is no ‘one size fits all’ unfortunately. The cost is dependant on the size of the business and the activities the business offers. For example the risk of running a gym will be different from running a climbing centre - therefore each business will warrant a different cost for its PL insurance. The claims history of that particular industry will also have an impact on the price of cover.
Can employees be covered within a Public Liability policy?
Unfortunately a PL policy is not designed to cover employees. In order to cover any employees that the business employs (including freelancers / labour only sub-contractors), the business will need to purchase an Employer’s Liability policy – which unlike a PL policy, can be a legal requirement.
An instructor employed by the gymnasium he was working for was providing a personal training session to one of the gym’s clients. The PT then instructed the client to perform an exercise in a way which lead to an injury. The customer then made a claim against the gym for the injury which enable the PL policy to come into effect.
Slips and trips – a spillage is left out and a member of the public using the premises slips and has a back injury. A PL policy will cover this type of claim.
A tile falls off of the premises and causes damage to a vehicle parked next to the property. This is third party property damage which would be picked up under a Public Liability policy.