Public Liability Insurance
Public liability covers you when your business injures somebody who does not work for you, or damages something that does not belong to you. It is the cover that pays the compensation and the legal bill when a customer trips over your cable or a dropped tool goes through somebody's windscreen.
What Public Liability Actually Covers
It is also the cover that is most often misunderstood. Public liability does not pay to put right your own work. If you fit a pipe badly and it leaks, the policy may pay for the damaged carpet and the ruined ceiling below, and it will not pay to refit the pipe. That distinction is behind a large share of the declined claims we see, and it is worth understanding before you need it rather than after.
Almost every commercial customer, main contractor and local authority will ask to see a certificate before you start. The limit they ask for is usually £5 million, and on public sector or rail work it is often £10 million.
What Public Liability Insurance Covers
Injury to members of the public
Compensation and legal costs where somebody who is not your employee is injured because of your business. A customer slipping on a wet floor, a passer by struck by falling material, a visitor hurt by equipment left where it should not have been.
Damage to third party property
Damage to property belonging to somebody else. A flood into the flat below, a scratched car on a client's driveway, a burst pipe that reaches a neighbour. Typically the insurer pays the repair and any consequential loss the claimant can prove.
Legal defence costs
The cost of defending a claim, which often runs well beyond the compensation itself and is payable whether or not the claim succeeds. Most policies cover defence costs in addition to the limit rather than inside it, though that varies by insurer and is worth checking.
Products liability
Injury or damage caused by goods you have supplied, installed or sold once they have left your hands. Usually bundled with public liability on a combined limit rather than bought separately.
Where The Cover Stops
Wordings differ between insurers, so treat these as the usual position rather than as universal fact. Where one of them matters to you, it is worth checking on your own schedule before you need to.
Your own workmanship
The cost of redoing work you got wrong is never covered. The resulting damage usually is. If you want the cost of the work itself protected, that is contract works cover rather than liability.
Property in your care, custody and control
The single most misread exclusion on the policy. The building you are working in, the machine you are servicing, the car you are repairing: while it is in your hands it typically falls outside public liability. Most insurers will write it back for a specified limit if you ask, and most people do not ask.
Injury to your own employees
That is employers' liability, which is a separate legal requirement. Public liability will not respond to a claim from somebody working under your direction, including a labour only subcontractor.
Professional advice
If the loss flows from something you advised, designed or specified rather than something you physically did, insurers will usually point at professional indemnity instead.
Anything on the road
Incidents involving a vehicle on a public road fall to motor insurance. Public liability picks up again once the vehicle is being used as a working platform rather than as transport, and the boundary is a common argument.
What Limit Do You Actually Need?
Policies are commonly written at £1 million, £2 million, £5 million and £10 million. The honest answer on limit is that it is usually chosen by whoever is hiring you rather than by you.
£1 million is rarely enough to satisfy a commercial client and is increasingly rejected outright. £5 million has become the default ask on most construction and commercial work. £10 million is standard for local authority contracts, rail, schools, utilities and most main contractor frameworks. If you expect to work for any of those, buying £5 million and upgrading later is usually a false economy, because the step up in premium between £5 million and £10 million is far smaller than people assume.
A limit is per claim on most wordings, not per year, which means one bad claim does not exhaust the cover for the rest of the period. Check that though, because it is not universal and an aggregate limit on products liability is common.
Subcontractors Change The Price And The Cover
Insurers divide subcontractors into two kinds and they are treated very differently. A bona fide subcontractor carries their own public liability, works to their own methods and is responsible for their own mistakes. A labour only subcontractor works under your direction, usually with your materials, and for insurance purposes is effectively your employee.
Labour only subcontractors are rated as wageroll, count towards your employers' liability, and must be declared. Bona fide subcontractors are rated separately and most insurers will require you to hold evidence that each one carries liability cover at a limit no lower than your own. If you cannot produce those certificates after a claim, the insurer may treat that subcontractor as labour only and the premium adjustment comes out of your settlement.
Keeping a folder of in date subcontractor certificates is dull and it is the single cheapest thing a contractor can do to protect a claim.
Claims Are Judged On What You Declared
Public liability is usually written on a claims occurring basis, which means the policy in force when the incident happened responds, even if the claim arrives years later. That is a good thing and it is why cancelled policies still matter.
What decides the claim is whether the work was within what you told the insurer you do. A roofer who declared pitched domestic roofing and was working on a flat commercial roof with a torch has a problem that no limit fixes. Trade descriptions, working heights, hot works and any work over three storeys are the usual flashpoints.
If what you do has changed since you last renewed, that is a five minute phone call now and a declined claim later.
What Moves The Price
We do not publish a starting price for this cover, because a figure that is not drawn from a policy we actually placed is worth nothing to you. What we can tell you is what the premium is built from.
- Turnover, which is the main rating factor on most trades
- What you actually do, described properly rather than by job title
- The limit of indemnity the work requires
- How many people work under your direction, including labour only subcontractors
- Working at height, hot works, and any work below ground
- Your claims record over the last three to five years
We are a broker, so we take it to several insurers rather than quoting one. Call 02382 000820 and you will have a real figure rather than a range.
What We Need To Quote
- What the business does, in plain terms rather than a job title
- Last year's turnover and an estimate for the coming year
- The limit of indemnity you need, and who is asking for it
- Number of employees and labour only subcontractors, with wageroll
- Any claims in the last five years, settled or open
- Whether you work at height, use heat, or dig
Cover that often goes with this
The gaps we most often find sitting next to this policy.
- Employers' liabilityThe compulsory one. Public liability will not respond to a claim from your own staff.
- Contractors all riskCovers the job itself, which is the gap public liability deliberately leaves.
- Professional indemnityWhere the loss came from your advice or design rather than your hands.
- Tradesman insuranceThe trade version of this, with tools and van cover built around it.
- All trades A to ZCover written for your specific trade rather than the general product.
- Talk to a brokerTell us what you do and we will say which of these you actually need.
Common questions
Is public liability insurance a legal requirement?+
No. Unlike employers' liability it is not required by law for most businesses. It is however required by most commercial contracts, most main contractors, most local authorities and many trade bodies, so in practice very few businesses can work without it.
Does public liability cover my own work if I get it wrong?+
No. The cost of putting right defective workmanship is excluded on essentially every wording. Damage that your defective work causes to other property is usually covered. If you need the work itself protected while it is in progress, that is contract works or contractors all risks cover.
What is the difference between £5 million and £10 million cover?+
Only the maximum the insurer will pay for any one claim. The cover is otherwise identical. The limit you need is almost always dictated by your clients, and £10 million is standard for local authority, rail and main contractor work.
Do I need public liability if I work from home?+
If clients, couriers or suppliers visit, or if you ever work at somebody else's property, yes. If nobody connected to the business ever comes to your home and you never attend a client site, the exposure is much smaller, though most people find they attend more sites than they thought.
Does it cover damage to the property I am working on?+
Usually not as standard. The building or item in your care, custody and control is typically excluded while you are working on it. Most insurers will write this back for a specified limit on request, which is worth doing before you start rather than after.
Am I covered for a claim made after my policy ends?+
Public liability is normally written on a claims occurring basis, so the policy that was in force when the incident happened responds, even if the claim is made years later. Professional indemnity works the other way round, which is why run off cover matters there and not here.
Other cover we arrange
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