The Importance Of Public Liability In Business

This type of insurance covers everything from injuries, death, and property damage endured by a third party, and caused by the negligence of the property owner. It should be noted that this policy does not cover claims made by employees, only claims made by third parties. It also does not cover any deliberate or criminal act.

This type of an insurance policy offers many benefits. The first and most obvious one is that it provides indemnity coverage for a business. Should a company lose a lawsuit, the money is paid by the insurance and not by the company or any personal assets. Such a policy can provide sufficient coverage, so that in the eventuality of a large claim, bankruptcy can be avoided. The coverage can even be broadened to protect employees, in case a third party is injured due to a mistake on their part while serving a client.

Who needs it?

Public Liability insurance protects one against claims from the public who may have suffered injury or their property was damaged in connection with a business. This makes public liability coverage essential for business owners. Since numerous people pass through a business place, any accident that is a result of negligence can lead to a lawsuit costing the business thousands and in some cases, even millions. We live in a litigious society and many examples of public liability cases can be found. The most famous case is Riebeck v. McDonald’s in 1994, where the woman spilling coffee on herself was awarded $2.86 million!

Businesses are not the only ones who can benefit from this insurance; home-owners, too, can benefit from it. If, for example, the postman came to deliver a letter and somehow managed to suffer an injury that is found to be the fault of the home-owner, the home-owner becomes liable to cover all expenses. If a child roams into a yard and manages to get injured, the home-owner can be held accountable. Even claims as frivolous as people getting hurt while passing by one’s property can cause major headaches.

Fortunately, these days a majority of the home and contents insurance policies include public liability insurance that covers the basic legal and medical costs. It is however essential to read the details of the policy and understand the responsibilities that come with owning a home. Having the legal system determining one to be negligent is one thing, but if an insurer finds the owner to be purposefully careless then the cover can be voided.

What is Covered?

Besides awards of damages due to the injury, the insurance covers:

  • Expenses
  • Legal costs
  • Hospital treatments
  • Ambulance costs (claimed by NHS)

Additionally, but to a lesser degree, public liability insurance can cover property damage that may take place on the owner’s property. For instance, if a guest or contractor working on-site incurs damage to their motorcycle from a falling tree, the home-owner is liable and public liability will cover it.


Premiums for the insurance are dependent on the type of business and determined on the basis of the level of activity the business sees. For example, premiums a hotel pays might be calculated on the basis of the beds a hotel has, because this reflects the number of guests a hotel will get. The amount of cover needed also varies according to the business. Many smaller businesses are satisfied with coverage of £1,000,000; however, some businesses may require coverage of £5,000,000 to £10,000,000 if the specifics of the contracts between the customer and business demand it.

The greater the risk one is exposed to, the greater the amount of coverage required. The cost needs to be taken into account as well. Those businesses where the number of people coming in is large, and they come repeatedly, are at a greater risk. This includes places like restaurants, grocery stores, and sport facilities. The cost of the coverage can be reduced by taking out a general insurance policy that includes office, employers, and public liability.

Getting the best deal means one has to shop around and do some research. It is imperative that the potential public liability policy seeker determine what level of coverage is needed. If unsure, insurance agents can give some pointers. Additionally, the policy seeker must be ready to answer questions like the number of employees, type of business, how long the company has been in operation, and its past public dealing record.