Public liability insurance protects your business against legal liability in case a third party sues your business and you are found negligent.
Public liability insurance is there to protect you or your business if someone is injured or their property is damaged and you or your business is faced with a compensation claim as a result. If your business has visitors (café, restaurant, barber shop, hire shop, mosque, church etc.) or you work as a contractor on client sites (plumber, electrician, builder, painter etc.), it is compulsory to have public liability insurance in place, in case you get a compensation claim from your clients, suppliers or member of the public suffer any personal injury or damage to the property due to your work.
Let's say, you work as a plumber and you fitted a new shower system at one of your customer’s home. However, due to some faulty fitting, a water pipe becomes loose and floods the bathroom, causing damage to the floor and the ceiling below.
Your customer sues you for the damages to his/her property. Your public liability insurance will cover the cost of the claim, including any legal expenses and the compensation that is finally awarded to that customer.
Café and coffee shops
As a café owner, you will have a number of customers coming in and out of your business premises. If any customers accidentally slip on a wet floor in your premises or if one of your employees accidentally spills coffee or any other hot drink on a customer; causing burns or damaging their mobile/laptop, public liability insurance will cover you against any compensation or legal costs coming out of the customer’s claim.
If your business falls in one of the categories below, you must make sure that you have public liability insurance in place.
Public liability insurance is different from business to business. However, following are the influencing circumstance that affect, how much you would pay to have this insurance cover in place?
Your business or trade type
Your business or trade type is one of biggest factor for deciding an insurance company to look into when generating a quote for public liability insurance for your business.
Third party visits
If you have large number of public visiting your business premises e.g. a private school, library or a restaurant, the risk of injury to the public is increased, thus resulting in a higher premium for your insurance cover.
Interestingly, if your business has a higher turnover, insurance companies would consider it to be risky as higher business turnover means, more chances of accidents or mishaps in your business.
Number of employees
The higher the number of employees in your business, the more chances of accidents. This results in higher insurance premium.
Just like motor insurance claims, if your business has been sued in the past and your insurance paid out the compensation, the chances are you will get a higher insurance premium.
We hope this brief guide will help you understand what the public liability insurance is when do you need it? This guide is part of series to help business startups to understand what protections they need in place to secure themselves from unseen circumstances that may jeopardize their business.