Why Public Liability Insurance is So Important for Business and Individuals

Whether you own a business or work as an independent contractor, it is important to protect your company and your personal finances with public liability insurance. This will protect you in the event you cause an injury to a third party or damage their property.

While such an occurrence may appear to be unlikely, given that the cost of legal, medical, and emotional compensation can escalate into the millions, all it takes is a a single incident for you to become insolvent.

What Public Liability Insurance Covers

There is a reason that public liability is standard for most businesses. Anything from a spilled drink, a slip on the floor, or negligent advice can result in a lawsuit against your business. Public Liability insurance is designed to safeguard your business in the event that such an accident occurs.

It will defray the cost of whatever property damage the claimant endured, as well as any medical fees and legal representation. Public liability insurance, however, does not cover the following:

Employee claims

Employer’s Liability Insurance is required for injuries and property damage suffered by your employees

Deliberate Negligence

If a safety issue was deliberately ignored or dismissed in order to save on costs, the insurance company will likely not cover you if an accident took place.

Examples of Public Liability Insurance Claims

In order to illustrate how public liability insurance works, here are a few classic scenarios that result in claims:

  • A self-employed PC support and repair technician visits a client site to mend some equipment. He accidentally spills a bottle of water into the client’s main server, causing irreparable damage. Not only does the equipment need to be replaced, but the client can no longer do business until the new server arrives.
  • You own a small store with a restroom. The area has been recently mopped, but the appropriate sign has not been placed to indicate the floor is wet. A customer slips on the tile and falls, injuring himself. He is unable to work as a result, and has a number of medical bills.
  • You run a day-care operation. While in your care, a child injures himself while running around, or swallows something toxic while under your supervision.

As you can see, the need for liability insurance is necessary regardless of the type of business you run. For child care providers and other high risk businesses, public liability insurance is mandated by law. As children are highly capricious, highly vulnerable, and are wont to injure themselves in a variety of ways, the need for a nanny to protect your business is all the more imperative.

How Much Cover You Will Require

The amount of cover you seek will dictate the cost of your premium. However, choosing an insurance plan with a low level of cover may leave your business vulnerable should an accident occur. In fact, some high risk businesses such as child care have government instituted requirements.

Otherwise, most public liability insurance plans tend to start at the £1 million, with increments of £5 million or £10 million for those in need of more protection.

Typically, you can save on the cost of premiums by bundling the insurance with other offerings, such as Employers’ Liability Insurance. You may find the price more favourable than had you purchased the items separately.

Business Liability Cover For Running A Farmers Market

There are roughly over 700 farmers’ markets in the United Kingdom, half of which are certified by FARMA. However, before you can set up your stall and act as a vendor, there are a few things you should keep in mind. For one, you must put in the research regarding the type of producers and whether there will be similar items sold at the market.

Once you have established there is a market for your product and a potential for profit, you must then do what you can to mitigate financial risk. Regardless of the type of business you run, there is always a chance that an accident can occur where you or your business is deemed responsible. If a customer were to get injured and need medical treatment, the cost of this incident can escalate into the millions of pounds.

Were that to happen your financial livelihood would be put in jeopardy. Public liability insurance is designed to safeguard yourself from such a tragedy by covering all your legal expenses as well as the legal and medical costs of the claimant.

Types of Liability

With public liability insurance, most brokers will offer packages with up to £5 million of cover for entitlements awarded for injuries or property damage. Typically, a judge may find you or your business negligent for any accident that occurs during the course of your business, whether it involve a sale, service, or the use of the products you sold. As a grocer, the most common insurance you will need is products liability.

As the food you sell will be ingested by your customers, there is always the possibility of some sort of allergic reaction. Contamination of food products is also a real possibility, and having insurance protection will defray the cost of the lawsuit should blame be ascribed to your business.

Shopping for Insurance

When shopping for insurance or looking for advice on how to manage your stall, it is always good to take advantage of a network of fellow market traders. FARMA, for instance is a group of producers and retailers that can assist you with finding a good broker. There are pros and cons with all brokers, and no policy is the same. Cheaper plans will likely come with less coverage. However, some cover may be deemed superfluous given the type of business you run. Regardless, public liability insurance is an important decision.

A good strategy to adopt is to set limits before you shop for insurance. For instance, first determine how much you can afford, and remove any insurance product from your list that does not fall within those parameters. Next, determine what type of cover you cannot do without. Also keep in mind that some cover may be available for cheaper when bundled with other policies, particular product liability and employers’ liability if you have a staff working under you.

Often times those looking to sell at the farmers market neglect the risk involved because the operation is small. However, like any big vendor, the fact that you interact with customers means there is always a chance an accident will occur. In this increasingly litigious society, an injury could result in a claim that ends up costing you thousands of pounds and threaten not only your financial health but the reputation of your business.

Don’t Be In The Dark About Public Liability Insurance

If you have a business where members of the public, customers, or clients regularly visit your business premises, you should consider purchasing a public liability insurance policy. Even self-employed home businesses should consider taking out a policy if the above prerequisites apply.

The reason for this is that a single incident involving a customer can ruin your financial status, destroy the reputation of your business and impact the rest of you life. Having public liability insurance provides a financial safety net and the legal resources to fight a negligence claim.

For example, imagine you are a IT support engineer. While visiting a client and helping them with their computer issues, you accidentally knock over a cup of coffee down the back of a server, damaging the hardware and knocking out the server. Not only will the client have to replace their server hardware, but their business may be shut down while they await replacement.

This could cost a company millions of pounds. An electrician can incorrectly wire a fuse box and burn out a circuit, or worse yet, cause a fire that causes immense damage to a property. As you can see, small mistakes here and there can result in large damages, which will bankrupt your business force you to re-evaluate how you make a living.

Amount of Cover Required

Given the potential costs of a public liability claim, you will need coverage that extends into the millions of pounds. For some types of businesses, this insurance is compulsory. Other will demand at least £1 million of cover, whereas in other instances you will need to take out £5 million or £10 million before you can take out a specific type of contract. Moreover, having a high liability limit will give both you and your customers peace of mind.

Having cover is not particularly expensive when compared to other types of insurance, but can be a significant investment for self-employed individuals with less revenue. Of course, more expensive policies are generally attached to businesses that are more at risk, and the more risk you incur the more critical insurance is.

What Your Insurance Covers

Public Liability insurance protects you against lawsuits made by a member of the public as a result of injury or damage to their property. In addition, it will also cover:

  • Legal fees
  • Miscellaneous costs and expenses
  • Medical treatment and ambulance expenses

This coverage will protect you in the event of an injury or property damage caused by you or your employees. It will only cover third party individuals, and not injuries or accidents that affect your employees. Premiums will be calculated on the type of business you run and the estimated level of activity. If any changes are made to your business operations after purchasing a policy, you must report these changes to your provider or you may not qualify for coverage should a claim be filed.

Consulting a Professional

Lastly, it is important to remember that when you shop for public liability insurance, you should take note of any exclusions and conditions that are applied. Often times the cheapest coverage will not provide the coverage you need, as they may exclude certain areas where your business is most vulnerable to a lawsuit.

Consider consulting a professional about the type of coverage you need and be sure the advisor is a member of the British Insurance Brokers’ Association (BIBA).