Public liability insurance protects you against compensation claims that are made against you by members of the public who allege that something you have done or have failed to do has resulted in them suffering personal injury or property damage.
In addition to paying any compensation awarded, it also pays any associated costs and expenses such as the claimant’s lost wages. The legal fees incurred as a result of the claim are also covered.
Your public liability insurer will help you deal with any compensation claims that are made against you. This is important because caterers often have “try on” claims made against them that aren’t valid claims. Because your liability insurer will have a team of fully trained, specialist claims handlers this means that it is more likely that such claims will be successfully defended.
Products liability insurance
Public liability for caterers usually comes as an insurance package that includes products liability insurance. Rather than covering compensation claims arising from things you have done or failed to do, products liability insurance covers claims arising from defects in products that you have sold or supplied.
This is an important cover even if you haven’t manufactured the products in question. If you supply any products you could still be legally liable in the event that they caused a problem even if the products were manufactured by someone else.
The indemnity limit
The indemnity limit is the maximum that the public and products liability insurance will pay in the event of a claim.
The standard indemnity limit is usually £1,000,000. This might sound like a lot of money, but serious injuries can result in a compensation awards in excess of £250,000, and the final claim settlement cost will be more once the legal fees and any other associated costs and expenses have been taken into account. Higher indemnity limits are available for an additional premium.
But it’s important to remember that whereas the public liability indemnity limit applies per claim, the products liability indemnity limit applies per policy period. This means that it is the maximum the products liability policy will pay out in any twelve-month insurance period.
Why this matters is that if there is a defect in one product, often there will be the same defect in the rest of the batch. If someone has suffered food poisoning because you’ve used contaminated meat, for instance, it’s quite likely that other people who eat other products from that batch will also suffer food poisoning.
If you’re supplying lots of similar products, it can be worth thinking about paying a slightly higher premium to increase your indemnity limit so you are fully protected.
Financial loss cover
Standard public and products liability insurance only covers claims which involve injuries or property damage. There is no cover for claims involving purely economic losses.
A financial loss insurance extension addresses this issue by extending the policy to cover such claims.
Is it compulsory?
Unlike employer’s liability insurance, which covers compensation claims made against you by your employees, public and products liability insurance is not a legal requirement. However, this isn’t a type of insurance that you should consider to be optional.
First, as already mentioned, compensation claims can be expensive to settle. A serious injury can result in a compensation claim that costs over £250,000. A food poisoning incident that ruined a wedding reception could be equally expensive to deal with.
But another major reason why you need public and products liability insurance is the fact that many clients will insist that you have the cover and will make it a contractual requirement. You might not be allowed to operate at a venue unless you can prove that you have a valid insurance policy in force. Local authorities might refuse to grant you a licence to trade if you are uninsured.
This means that your opportunities to work could be limited if you do not have public and products liability insurance.