Public Liability Insurance for Beginners

Web page content explaining public liability insurance for customers.

    • Finance
    • CG Lloyds
    • 10-05-16

It’s an unfortunate fact that many businesses take out public liability insurance without fully appreciating the scope of their policy.

As a result, companies often find themselves forking out rather large fees for damages that they are not fully covered for. With this in mind, we’ve provided a guide to the sometimes confusing concept of PLI and how it may apply to your business.

What Does PLI Cover?

PLI is the most common form of insurance taken out by small to medium businesses. It’s intended to cover the costs of any claims made by members of the public for incidents caused by one’s business activities.

Policies typically cover a diverse range of situations and generally relate to personal injuries, damage/loss to property and death.

Specifically PLI usually offers cover for compensation claims, legal expenses, the costs of repairing damage and medical expenses.

Unfortunately, such incidents don’t have to be that serious for most individuals to make some sort of claim. And as is often the case, even a simple accident can lose a company millions of pounds.

Although policies vary according to insurer, most PLI plans cover businesses for incidents which occur both on and off-site as well as activities or events that are organised by a company.

Public liability insurance is therefore especially important if you own premises that are accessible to the public. This also applies to home-based companies that are visited by customers.

What Isn’t Covered by PLI

Public liability insurance does not cover incidents which happen to you, your own property or accidents which affect your employees. These are either covered by general business or employer’s liability insurance.

How Much Cover Should I Take out?

The level of public liability cover you should buy depends on the level of risk undertaken by your company on a daily basis.

In most business/industry niches there’s usually an accepted minimum standard of cover, which you can use as a guideline.

For instance, local council or government contracts usually start at around £5 million. However, for standard business types such as shops the minimum level is often around £1 million.

Certain insurers bundle public liability, employer’s liability and professional indemnity insurance together. This is often a great way to save money and can help to simplify the whole process by having all your insurance cover ‘under one roof’ as it were.

Is PLI a Legal Requirement?

Despite the rampant ‘no-win’, ‘no-fee’ culture which has companies paying out millions each year, there is actually no legal obligation to purchase PLI.

In fact, employer’s liability insurance is the only compulsory form of insurance required for a business (provided there is more than one employee).

Nevertheless, for any serious business, it is essential to have some sort of public liability cover in place. This ensures that it is not only protected financially, but that the interests of the general public as well as its clients are properly safeguarded.