Who needs public liability insurance?
All tradesmen need UK liability insurance. You need it to protect you if compensation claims are made against you.
Although public liability insurance isn’t required by law, you may be contractually required to have it. You may also be required to have this type of insurance as a condition of a professional body or trade association.
Additionally, it’s important to have public liability insurance because compensation claims can be expensive to settle. A claim for a serious injury can cost over £250,000 and property damage claims can result in significant settlement amounts as well.
What does public liability insurance cover?
Public liability insurance covers you if a compensation claim is made against you by a third party who alleges that something you have done or failed to do has resulted in them being injured or their property damaged.
In addition to paying any compensation awarded, it also pays any associated costs and expenses such as:
- The claimant’s lost wages
- Travel costs if the claimant had to attend hospital
- The cost of adapting the claimant’s home if needed due to the claimant’s injury
If you are using heat, it is important to check that your public liability insurance does not include an exclusion of claims arising out of heat use. It’s also important to check whether there are conditions that apply when you are using heat and if there are, that you comply with those conditions.
Public liability insurance policies can also have a height limit or a depth limit that restricts what work you are covered for, so you should check your policy to make sure you are insured for all of the work that you do.
As well as paying any compensation awarded against you and any associated costs and expenses, public liability insurance also covers the legal costs that are incurred in handling compensation claims.
Your public liability insurer will also deal with any claims on your behalf, which means that you won’t have to worry about getting involved in potentially complex legal arguments.
The indemnity limit
The indemnity limit in a public liability policy is the maximum amount that the insurance company will pay in the event of a claim.
The standard indemnity limit is normally £1,000,000 but you may be contractually required to have a higher limit or may decide that you need a higher limit due to the nature of the work that you are doing. If you need a higher indemnity limit, this can be arranged for an additional premium.
The financial loss cover extension
Standard public liability insurance covers compensation claims involving injuries or property damage, but it doesn’t cover compensation claims for purely economic losses.
The financial loss cover extension addresses this issue and you need to make sure your public liability insurance contains this extension to ensure that you are fully covered.
Products liability insurance
Public liability insurance covers compensation claims that are made against you by people who allege that something you have done or failed to do has resulted in a loss, but it doesn’t cover compensation claims arising as a result of a defect in a product that you have sold or supplied.
Products liability insurance deals with this potential gap in cover and can usually be added to a public liability insurance policy.
Professional indemnity insurance
There is no cover for claims arising as a result of professional negligence in a public liability insurance policy. If there is a problem with the design of a design and build project, any claims would be covered. However, if you provide designs or advice for a fee rather as part of a design and build contract, or if you provide those designs/advice in circumstances where a fee would normally have been charged, there is no cover.
If part of your business involves providing designs or advice, you would need professional indemnity insurance to cover you against such claims.