If you’re thinking of starting a self-employed business, or perhaps you already have one, you may have heard that you need insurance.  Many people starting their own businesses aren’t sure why they need insurance and don’t really understand what it covers.  In this article, we will explore exactly what public liability insurance is and why it can be relevant to those who are self-employed.  

Read on to learn more about this specific type of business insurance and whether you should consider it if you are embarking upon self-employment.

What is Public Liability Insurance for the Self-Employed?

Public liability insurance is a crucial form of coverage for self-employed individuals, providing financial protection against potential claims made by third parties for bodily injury or property damage caused by your business activities. While it may not be a legal requirement in all jurisdictions, having public liability insurance is highly recommended to safeguard your business and personal assets.

As a self-employed individual, you may find yourself interacting with clients, customers, or members of the public in various settings. Whether you provide a service, sell products online, or operate from a physical location, there's always a chance that an accident or mishap could occur, leading to injuries or property damage. In such situations, you could be held responsible for the damages, and the costs can be substantial.

Public liability insurance helps mitigate these risks by covering the legal and compensation expenses associated with such claims. Here are a few key aspects to consider when evaluating the relevance of public liability insurance for your self-employed business:

1. Protecting your business assets: 

If a third party were to file a claim against your business, the financial implications could be significant. Public liability insurance ensures that your business assets, such as equipment, inventory, or intellectual property, are protected in the event of a claim.

2. Covering legal expenses: 

Defending against a claim can be a complex and costly process. Public liability insurance typically covers legal fees, including hiring lawyers and other legal professionals to represent your interests. This coverage can be invaluable in ensuring that you have the necessary resources to mount a robust defence.

3. Compensation for damages: 

If a claim is successful, and you are found liable for injuries or property damage caused by your business activities, public liability insurance can cover the compensation awarded to the claimant. This can include medical expenses, repair or replacement costs, and even loss of income in some cases.

4. Peace of mind: 

Operating a self-employed business comes with its fair share of uncertainties. Having public liability insurance provides peace of mind, knowing that you have a safety net in place should an unexpected incident occur. It allows you to focus on running your business without constantly worrying about the financial implications of a potential claim.

When considering public liability insurance, it's important to assess the nature of your business, the potential risks involved, and the level of coverage required. The premiums for this type of insurance can vary depending on factors such as the size of your business, the industry you operate in, and your previous claims history.

Who Needs Public Liability Insurance?

Public liability insurance is relevant and recommended for various individuals and businesses that interact with the public. Here are some examples of who may need public liability insurance:

• Self-employed individuals: Whether you're a freelancer, contractor, consultant, or offer professional services, having public liability insurance is important. It protects you against potential claims arising from accidents or damages caused to third parties during the course of your work.

• Small business owners: If you own a small business that involves interactions with clients, customers, or the general public, public liability insurance is essential. This includes businesses such as retail shops, restaurants, salons, tradespeople (plumbers, electricians, etc.), event organisers, and many others.

• Tradespeople and contractors: Professionals who work in trades such as construction, plumbing, electrical work, landscaping, and painting should strongly consider public liability insurance. The nature of their work involves potential risks to the public and their property, making this coverage crucial.

• Service providers: Service-based businesses, such as cleaning companies, pet sitters, personal trainers, or event planners, should have public liability insurance. Accidents or property damage can occur while providing services, and this coverage safeguards against potential claims.

• Event organisers: If you organise events, conferences, exhibitions, or trade shows, public liability insurance is vital. Events involve large numbers of people in potentially hazardous environments, and this coverage protects you from claims related to injuries or damages that may occur during the event.

• Venue owners: Owners or operators of venues, such as restaurants, theatres, wedding venues, or sports facilities, should have public liability insurance. It provides protection against claims if someone is injured or their property is damaged while on the premises.

• Professionals in client-facing roles: Individuals who offer professional advice or services, such as accountants, financial advisors, consultants, or therapists, may require public liability insurance. It covers them in case a client suffers financial losses or other damages due to their advice or services.

Remember that the need for public liability insurance may vary depending on your location and industry. Some professions or industries may have specific legal requirements for insurance coverage. Additionally, clients or businesses you work with may require you to have public liability insurance before entering into contracts or partnerships.

It's advisable to consult with insurance providers or brokers to assess your specific situation and determine whether public liability insurance is necessary for you or your business. They can help you understand the risks associated with your work and guide you in choosing appropriate coverage.

What Does Public Liability Insurance Cover?

Public liability insurance in the UK typically covers the following aspects:

Bodily injury to third parties: 

If a member of the public or a customer suffers an injury as a result of your business activities, public liability insurance can cover the costs associated with their medical treatment, rehabilitation, and any related expenses. For example, if a customer slips and falls in your store and sustains an injury, your insurance can cover their medical bills.

Property damage: 

Public liability insurance can cover the costs of repairing or replacing property that belongs to a third party and has been damaged due to your business activities. For instance, if you accidentally damage a client's property while working on their premises, your insurance can cover the repair or replacement costs.

Legal expenses: 

Public liability insurance typically includes coverage for legal fees and related expenses if a claim is made against you. This can encompass the cost of hiring lawyers, legal representation, and any court-related expenses that arise from defending yourself against a claim.

Compensation claims: 

If you are found liable for causing injury or property damage to a third party, public liability insurance can cover the compensation that you are legally obligated to pay. This includes damages awarded to the claimant, such as pain and suffering, loss of earnings, or other financial losses they may have incurred.

Product liability: 

In some cases, public liability insurance may also cover product liability claims. This applies if your business manufactures, supplies, or sells products, and a defect in the product causes harm or damage to a third party. Product liability coverage can help protect you against claims related to defective products.

What Does Public Liability Insurance NOT Cover?

While public liability insurance provides broad coverage for many potential risks, it's important to understand the limitations and exclusions that are typically found in these policies. Here are some common situations and events that are generally not covered by public liability insurance:

• Injury or damage to employees: Public liability insurance does not cover injuries or damages suffered by you or your employees. For such cases, you would need employers' liability insurance to provide coverage.

• Professional negligence: Public liability insurance usually does not cover claims arising from professional negligence or errors in professional advice or services. If your business involves providing professional advice or services, you may need professional indemnity insurance to protect against such claims.

• Intentional acts: Public liability insurance generally does not cover intentional acts or deliberate harm caused by you or your employees. It is designed to cover accidental or unintended incidents, not intentional wrongdoing.

• Contractual liabilities: Public liability insurance does not typically cover liabilities that arise from contractual agreements or breaches of contract. Any contractual obligations or liabilities should be addressed separately through contract and liability clauses.

• Employee disputes: Claims related to employment disputes, such as wrongful termination or discrimination, are not covered by public liability insurance. These fall under employment practices liability insurance or similar specialised coverage.

• Property damage to your own assets: Public liability insurance does not cover damage to your own property or assets. It is specifically designed to cover third-party property damage.

• Criminal activities: Claims related to criminal activities, illegal acts, or intentional damage caused by you or your employees are generally excluded from public liability insurance coverage.

How Much Does Public Liability Insurance Cost in the UK?

The cost of public liability insurance in the UK can vary depending on several factors, including the nature of your business, the level of coverage you require, and the insurer you choose. While I can't provide you with specific figures as insurance rates are determined by individual insurers, I can give you a general idea of the pricing range.

For small businesses and self-employed individuals, public liability insurance premiums typically start at around £50 to £100 per year. However, this is just a baseline estimate, and the actual cost can be higher depending on various factors. The size and scale of your business operations, the industry you operate in, the number of employees you have, and your claims history can all impact the premium.

Additionally, the level of coverage you select will also influence the cost. Higher coverage limits and additional features or extensions to the policy may increase the premium. It's essential to carefully assess your business needs and determine the appropriate level of coverage to strike a balance between protection and affordability.

To get an accurate idea of the cost of public liability insurance for your specific business, it's advisable to contact insurance providers or use online comparison tools. By providing details about your business, you can receive customised quotes that reflect your unique circumstances. Remember to compare different insurers, their coverage options, and the reputation and reliability of the company before making a decision.

Keep in mind that while the cost of insurance is an important consideration, it should not be the sole determining factor. It's essential to choose a reputable insurer that offers comprehensive coverage and reliable customer service to ensure that you receive adequate support in case of a claim.

The cost of public liability insurance in the UK can vary significantly, so it's crucial to gather multiple quotes, compare coverage options, and select a policy that best suits your business needs and budget.

What Factors Affect the Cost of Public Liability Insurance for Businesses?

Some industries are inherently riskier than others, and insurance premiums may be higher for businesses operating in those industries. For example, construction or high-liability industries may have higher premiums.

The size and annual revenue of your business can also influence the cost of insurance. Larger businesses with higher revenues may have higher premiums due to the increased potential exposure to claims.

The level of coverage you choose for your public liability insurance policy will impact the cost. Higher coverage limits typically result in higher premiums.

If your business has a history of previous claims, it may result in higher premiums as insurers perceive a higher risk.

Insurers assess the specific risks associated with your business activities, location, and operations. If your business is deemed to have higher risk factors, it may lead to increased premiums.

Final word

Public liability insurance is a vital component of risk management for self-employed individuals. It protects your business assets, covers legal expenses, and provides compensation for damages in the event of a claim. 

While not mandatory in all cases, investing in public liability insurance is a smart and responsible decision that can safeguard your self-employed business and personal finances. Don't overlook the importance of this coverage when embarking on your self-employment journey.