For small businesses and those who are self-employed, business insurance is a necessity. Public liability insurance covers the costs of damages resulting from negligence, inaccuracy and misrepresentation, and relates specifically to bodily, property or advertising damage.
The costs incurred from accidents and oversights that larger businesses can absorb have the potential to seriously affect a smaller businesses solvency. Public liability insurance protects a business and the customer in the event of an accident, covering medical, legal, structural and other costs that a business would otherwise have sole responsibility for.
There are two main types of public liability insurance to consider: standard liability insurance for tradespeople and Professional Indemnity Insurance for those whose businesses trade in advice or consultation rather than material goods. Despite both being a form of public liability insurance, they are different and you should have a clear understanding of the damages you need to insure against.
Public Liability Insurance
Personal Liability Insurance protects customers, and your business, if they are injured on your property. If someone slips on a wet floor that doesn’t have the appropriate warning sign, then you will likely have to pay expensive medical and legal costs. It also covers damage done to other people’s property while you are working on or near it.
Despite all reasonable precautions, accidents can happen. For example, you may be installing a new kitchen counter and while doing so you accidentally severe some electrical wiring. Without public liability insurance you would be responsible for covering the costs of contracting an electrician to repair the damage. Or you may be re-wiring an old kitchen, and in doing so you puncture a concealed water pipe. You would then be responsible for contracting a plumber.
Whatever your trade, chances are that you’ll need public liability insurance. From plumbers to electricians, kitchen fitters to joiners, to painters, decorators, plasterers, and alarm fitters, all tradespeople take this sensible and necessary precaution. Although it’s not a legal requirement, many larger businesses will not offer you contracts without it, and if you are subcontracting you’ll want the peace of mind that comes with cover for the negligence of others than you have responsibility for.
Professional Indemnity Insurance
If you provide advice that directly leads to financial loss, there may be no physical damage to a person or property but you can still be liable for misrepresenting the quality of your service. Products that fail to perform, that require redesigning or substitution, can warrant a claim on behalf of a third party for the same reasons. This is a particular concern for professions such as software development, financial planning and freelance consultancy, and estate agents, architects, engineers and interior designers regularly obtain professional indemnity insurance.
The difference in the rational between the two types of insurance is minimal, but in practice they cover very different scenarios.
Choosing a Policy
Whichever type of insurance is most suitable to your business, you will need to review the details of your policy very carefully to make sure important aspects are covered. Those offering cheaper insurance are often able to do so through excluding certain aspects of cover, such as working at heights. If you’re regularly on a ladder, having insurance that only covers working on the ground will not be very useful. Insurance firms like AXA Business that provide a range of different policy options are more likely to be able to tailor a policy to your needs.
As with all other insurance, you should compare policies and prices from at least 4 different companies, and make sure that the company you go with has a sound reputation.