What is public liability insurance?

Public liability insurance protects you if a member of the public is injured, killed, or has their property damaged while on your premises, or if you or your staff fail to exercise due care while carrying out your business activities. It is one of the forms of insurance that companies should consider purchasing.

What is covered by public liability insurance?

Public liability insurance is especially relevant if members of the general public (such as clients, vendors, or other individuals) regularly visit your premises or if you or your employees have direct contact with them while at work. Passers-by can also file a lawsuit if they are hurt or their property or belongings are harmed as a result of your business activities.

Members of the public can file public liability lawsuits against your company as a result of an accident at:

• Your business premises; 
• Your home if you run your business from there; 
• A customer's home or workplace; or 
• An off-site event or activity organised by your company.

The public liability insurance will protect your company in the event of a lawsuit for compensation for any damage, injury, or death to members of the public for which your company is found to be liable. This can include things like:

• Their lost wages; 
• The cost of repairing or replacing damaged property; 
• Their medical expenses for injuries; and your and the claimant's legal fees.

The total amount payable by the insurer will be limited to an amount specified in the contract, so any claim in excess of this amount must be paid by you or your company.

Public liability insurance does not protect the company against employee death, illness, or loss. This is instead protected by the liability insurance of the employer.

Examples of potential public liability claims

Compensation claims for flights, slides and falls are the most common, but other accidents can also result in such claims. The following are some examples of incidents that may lead to public liability lawsuits against your company:

• You leave a box on the floor of your store, which a customer falls over, resulting in an injury;
• In a café, your employee spills a drink, causing a customer to trip and fall;
• A supplier suffers an accident after falling down some stairs in your factory because the handrail is broken;
• While performing carpentry repairs at a client's office, you leave a plane on the floor, which an employee of the other company falls over, resulting in an accident and a lawsuit against you;
• Tiles fall off a roof your company is fixing, killing a passer-by because your workers did not take enough precautions to protect them;
• When bringing in a carpet for a customer's home, you knock over a precious antique; you incorrectly wire the electrics in a customer's home, causing a fire; or
• A customer becomes ill with food poisoning after consuming food that was not properly stored at your restaurant.

The amount of coverage needed can be difficult to determine, but insurance agents or insurers can assist. It will be determined by the following factors: 

• The quality of your company; 
• The risks posed to members of the public by your business premises and operations; 
• The size or turnover of your business;
• The form of customers; 
• The number of people you employ; and
• Your claim history with insurers

If you hire someone to do work for you at your company, you can ask to see their insurance schedule and paperwork before hiring them in case they cause harm to your property or your employees. Persona Finance [enquiries@personafinance.co.uk] will provide accounting and business advice.