What Is Public Liability Insurance?
Public Liability Insurance can protect your business against legal liability for accidental injury to third parties or accidental damage to their property arising from your business activities.
Examples could include a customer slipping at your premises, a contractor damaging property while working at a client’s site, or a member of the public being injured because of work being carried out.
It can cover compensation and associated legal costs, subject to the policy terms and limits.
Public Liability Insurance is relevant to many different businesses, including contractors, trades, retailers, hospitality businesses, offices, professional firms and businesses that regularly visit customers.
What Is Employers’ Liability Insurance?
Employers’ Liability Insurance protects businesses against claims from employees who suffer injury or illness because of their work.
Most UK employers are legally required to hold Employers’ Liability Insurance for at least £5 million from an authorised insurer, although exemptions can apply.
In practice, many commercial policies provide a higher standard limit, often £10 million.
Employers’ Liability can cover compensation payments and legal costs arising from employee claims.
Who Counts as an Employee?
This is an important question because the answer is not always limited to people on a traditional payroll.
Depending on the circumstances, Employers’ Liability requirements can potentially extend to temporary staff, casual workers, apprentices, labour-only subcontractors and other people working under your direction and control.
This is one of the areas where it is important to explain clearly to your broker how your workforce is structured.
Is Public Liability Insurance Compulsory?
Public Liability Insurance is not generally compulsory by law. However, many businesses still need it in practice.
Customers, landlords, local authorities, principal contractors and professional bodies may insist on a minimum level of cover before allowing you to work for them or on their premises.
For contractors and trades, this is particularly common.
How Much Liability Cover Do I Need?
There is no single limit that is right for every business. Public Liability limits commonly start at £1 million or £2 million, but contracts may require £5 million or £10 million.
The appropriate level can depend on the type of work you undertake, the size of your contracts, where you work and the potential severity of a claim.
Employers’ Liability must generally provide at least £5 million of cover under UK law.
Public Liability vs Employers’ Liability – What Is the Main Difference?
The simplest distinction is who is making the claim.
Public Liability relates primarily to third parties, such as customers, visitors and members of the public.
Employers’ Liability relates to employees and people who may be treated as employees for insurance purposes.
A business may therefore need both policies.
AXA describes the same core distinction: Public Liability protects against claims from third parties, while Employers’ Liability addresses claims arising from employees.
What Types of Businesses Commonly Need Both?
Many businesses require both Public Liability and Employers’ Liability, particularly where they employ people and interact with customers or work away from their own premises.
Examples include:
Contractors and trades
Construction businesses
Property maintenance companies
Retailers
Restaurants and hospitality businesses
Manufacturers
Engineering companies
Warehouses and wholesalers
Offices with employees
Cleaning companies
Businesses working at customer premises
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Not Sure Which Liability Cover You Need?
Tell us how your business operates, who works for you and where your work takes place.
We can help you understand whether Public Liability, Employers’ Liability or both should be considered and discuss appropriate limits of cover.
Call Morris Perrin Insurance Consultants on 01252 299094 or book a consultation.
Reviewed by Jeremy Perrin, Managing Director, Morris Perrin Insurance Consultants Ltd.
