When it comes to purchasing public liability insurance it always helps to understand the rules and regulations, as well as be able to dispel some of the myths that can arise about its many benefits. When purchasing this insurance, it’s important to be clear with the insurance provider and ensure that the quote is in line with the size and potential requirements of your business.
Failing to be honest about the size and expectations of your business can lead to your insurance claim being voided in the event of a claim being made. This can cause extreme financial loss to a business and is not worth the hassle. To help you avoid this troublesome scenario, we’ve put together the top 5 myths surrounding public liability insurance.
Public Liability Insurance is mandatory
Unlike employer’s liability insurance, public liability insurance isn’t, in fact, a mandatory requirement in the UK. At least not legally. In the UK employers are required to purchase insurance cover that protects both themselves and their employees against claims. However, conversely, businesses aren’t legally obliged to purchase cover when it comes to claims that can be made by third parties, including other businesses and the general public.
Although this may seem like an opportunity to save some expense for your business, a decision not to purchase public liability insurance would be an extremely unwise one. Looking for cost-savings in the short term is all well and good, but when a claim made by a third party is written against you, you don’t want to be forced to pay the medical bills and court fees out of your own pocket.
Public Liability Insurance will cover the legal costs and compensation payments made against you if your business is held responsible for injury or property damage to a client, member of the public or any other contractor in relation to your work. Although you may never experience the need for public liability insurance cover you will rue the day that you never took out that insurance package for your business when the claim is finally made against you. Claims can be made for things as simple as damaged computer equipment all the way to more serious incidents where fatalities and serious injury to the general public occurs.
Public Liability Insurance covers negligence or bad advice
It’s often the case that public liability insurance manages to get confused with professional indemnity insurance. Public liability insurance covers you for claims made against you by third parties such as the general public, as well as any compensation or medical costs that arise. Professional indemnity insurance, however, is centred around claims made against you, surrounding professional negligence causing a financial loss as a result of bad advice.
The difference between these two types of insurance can often create a grey area for businesses looking to get the most cost-effective insurance plans. Sometimes a business may think they’re covered for one incident when they’re actually not. Let’s take a look at an example. Let’s say a joiner has damaged a wardrobe while he was busy fitting another wardrobe in a client’s home. These damages would be covered by public liability insurance.
Professional indemnity insurance would be used if the joiner fitted the correct wardrobes, but they weren’t to the correct specification that the client required, weren’t suitable or were required to be rectified. It’s helpful to know the difference between the two to ensure that you’re not caught out further down the line and forced to make huge payouts that could cause your business great financial loss.
You need new insurance for different contracts
When new businesses are purchasing their public liability insurance, they can often be put off by the fact they think they need a new insurance plan for each new contract that they take on. This isn’t the case. Each business only needs one public liability insurance plan to cater to all the contracts they possess.
However, it’s important you understand that if your business grows and you begin working on larger, more financially viable projects, the limit on your insurance cover may be exceeded. Let’s consider the difference in liability demands of a builder working inside a domestic home vs a construction company working on a large city-centre building site where there are many members of the general public about.
Public Liability Insurance covers financial losses
Although a third party can claim against your business for things like injury or damage to their property, they can’t claim against your business for direct financial loss as a result of the service you have provided. This may seem like an unfortunate loophole within your public liability insurance package, but there are most likely other channels claimants or businesses can go down rather than claiming against direct financial loss.
You can shut down the business if you get sued
In the event of a claim being made against your business by a third party like the general public for suspected property damage or injury, you can’t simply close down your business in an attempt to eliminate the costs of the claim made by the third party. Any cases made against the business will automatically be transferred to the sole trader on a personal level and will need to be paid. The only way to bypass this expense is by possessing adequate public liability insurance cover.
Tradesman Saver provides a multitude of insurance packages to suit all sorts of businesses, whatever the contracts you work on and whatever the size of your business. It’s important that your business is prepared to operate in a safe and credible fashion and you’re adequately insured in the event of a third party claim made against you. Public Liability Insurance will do just the trick and allow your mind as well as your employees to rest easy in the event of a claim made against you.