Perhaps you’ve heard the term, “public liability insurance” and are wondering who needs it. Or perhaps you are wondering if your employers’ liability is adequate enough to forego having public liability insurance. Or maybe your question is, “Can I use public liability insurance instead of employers’ liability to cover my employees?”

Public liability vs. Employers’ liability cover

Although both types of insurance provide liability coverage, public and employers’ liability differ from each other. Employers’ liability cover claims made by employees or former employees against you or your business. It’s a compulsory type of insurance.

Public liability cover claims made by members of the public. It is generally a voluntary type of insurance. One cannot be used to replace the other. If you hire anyone else to work for you, then you must have employers’ liability insurance. This is a compulsory even if you only hire part-time workers.

Public liability users

Every type of business and industry presents a potential risk to members of the public. So every business is a potential user of public liability insurance. It doesn’t matter whether the business is large or small, or where it’s located.

Despite the safety precautions taken, sooner or later some member of the public may be physically injured or have their property damaged. This can be a customer, visitor, trespasser, sub-contractor, or some other member of the public. Or there will be some occasion where you or an employee made someone unhappy with your services or the work performed.

Types of incidents covered by public liability

This type of liability cover protects against claims made by someone who was accidentally injured by you or your business operation. For instance, if a delivery person slipped on the floor your employee just mopped. Another example would be if a customer was injured by tripping over the tool you accidentally left behind on your last business visit to the customer’s premises.

Public liability also protects you and your business against third party property damage claims. For instance, you or an employee spilled a beverage while performing a service, and it badly stained your customer’s expensive carpet. Another sample would be if your employee got the addresses mixed up, and started digging up the wrong yard.

Basically, public liability will cover claims made by a third party for accidental physical injury, illness, or property damage. It will also pay any legal fees and expenses (up to amount specified by policy) which result from such claim. In some covers, legal assistance for third party libel, slander, or infringement rights lawsuits is also included.

Amount of coverage needed

All businesses need at least the minimum amount of public liability coverage. The standard options usually are £1,000,000, £2,000,000 and £5,000,000. However, if needed, some insurers will increase this to a £10,000,000 limit of indemnity.

The amount of coverage needed will largely depend on the size and nature of the business. Businesses that are frequented by large numbers of third parties at leisure, such as a pub or market, need quite a large amount of coverage. The more exposed a business is to the public, the greater the risk is for third party claims. The consumption of alcohol and sporting events tend to increase the risk as well. Certain industries are also at higher risk than others. For instance, cleaning and security are at high risk according to insurance underwriters. The best way to determine the amount needed is to talk to an insurance consultant, broker, or adviser.