All electricians need public liability insurance. The need it to protect their businesses and they may also need it because their main contractor will make it a contractual requirement and won’t let them on site without it.
But many electricians begrudge paying for it and don’t really understand what public liability insurance covers. They understand that they need to insure their tools, equipment and materials against damage or theft, and they understand that they need to insure their van. But they don’t understand why they need public liability insurance.
So, what does electrician’s public liability insurance cover?
Electrician’s public liability insurance covers any compensation claims that are made against you by third parties that allege something you have done, or failed to do, has resulted in them being injured or their property being damaged.
It only covers compensation claims where you are legally liable and does not cover goodwill gestures. However, most compensation claims are settled without a court appearance being required.
Compensation claims can be expensive to settle. A relatively minor injury can easily end up costing over £10,000, with serious injuries often being settled for six-figure sums. Similarly, if an electric fault results in a fire, the compensation claim is likely to be substantial.
Most electricians would struggle if they did not have insurance to cover them in the event of such a compensation claim being made against them, and some might even end up going out of business. For this reason, it is vital that an electrician has public liability insurance to protect their business.
Legal costs & expenses
Compensation claims often involve complex legal arguments and, as such, the legal costs and expenses can mount up. Sometimes these costs and expenses can exceed the amount of compensation that is finally awarded, and even if the compensation claim is successfully defended, there could be legal costs and expenses to pay.
In addition to paying any compensation that is awarded against you, electrician’s public liability insurance will also pay the legal costs and expenses that are incurred. The insurance pays not just the claimants legal costs and expenses, but your legal costs and expenses as well.
Your insurer will also have a legally trained team that are specialists in handling compensation claims and will handle the claim on your behalf, so you won’t have to worry about dealing with legal matters and can concentrate on your business. Without public liability insurance, you would either need to handle the claim yourself or employ a solicitor to handle the claim on your behalf.
Electrician’s public liability insurance usually includes products liability insurance.
Whereas public liability insurance covers compensation claims arising from things that you have done or failed to do, products liability insurance covers compensation claims arising from defects in products that you have sold or supplied.
You need to make sure that your insurance policy includes products liability insurance because otherwise, any compensation claims arising from your electrical work once you’ve completed the work would not be covered and you could find that you are uninsured in the event of a large claim being made against you.
Standard public liability insurance only covers compensation claims involving injuries or property damage. They do not cover compensation claims for purely economic losses.
This could leave an electrician uninsured. If there is a problem with their work that didn’t injure anyone or damage any property, but meant that a business was unable to trade as they had no power, a compensation claim made by that business for their loss of revenue would not be covered.
An electrician’s public liability insurance policy should include a financial loss extension which covers compensation claims for purely economic losses.