Is public liability insurance compulsory?

Accidents can happen at any point, even if your business has taken all the necessary precautions to help prevent them. And whether you’re a self-employed contractor or the owner of a multi-outlet retail store, serious accidents can cost you. 

Fortunately, if you’ve got public liability insurance, your business will have coverage if you’re liable to compensate a member of the public.

But is public liability insurance compulsory? The answer is no. Businesses — including self-employed professionals — aren’t legally required to have it.

However, trade bodies and associations in some industries may require you to have a minimum amount of public liability insurance for regulatory compliance. Additionally, some contractors may only work with your business if you have this insurance.

In this guide, you’ll learn which insurance is compulsory in the UK, what’s covered by public liability insurance, how much it’ll cost, and why you might need it.

What insurance is compulsory in the UK?

Any business in the UK that employs at least one person (who isn’t related to the business owner) is legally required to have employers’ liability insurance. For individuals, car insurance is also compulsory in the UK if you drive. Other than these two, you’re generally not required to have other types of insurance by law in the UK.

The main difference between employer’s liability insurance (also known as employee liability insurance) and public liability insurance is that they cover claims made by different types of parties.

Employer’s liability insurance covers claims made by employees or ex-employees, while public liability is for claims made by third parties, such as customers, suppliers, and members of the public. Both types of coverage are for any accidents, injuries, or financial losses for which another party is claiming compensation.

What coverage does public liability insurance offer?

Public liability insurance protects your business in situations where a client, customer, or member of the public holds your business liable for activities that caused them personal injury or property damage.

Importantly, public liability insurance doesn’t cover all business-related accidents and incidents. For example, it won’t cover:

• Accidents to you or damage to your business’s premises.

• Accidents to your employees and their possessions. This applies to ones on leave and even ex-employees.

• Claims of fault with the products or services your business delivered.

Various accidents can lead to claims where public liability insurance is applicable, though. Let’s consider an electrician working in a client’s home. Say they knock over a vase by mistake or damage a wall. Or, let’s say you’re managing a store and a customer falls over on a spill, injuring themself.

In both cases, the third party might claim damages from your business, and public liability insurance can cover:

• Compensation costs, if the party making the claim suffered any property damage.

• Medical fees, if someone needs medical treatment as a result of being injured by your business operations.

• Repair costs, due to any accidental damage to the third party’s property.

• Legal fees you may need to pay for proceedings following public liability claims.

Thus, it’s important to be clear on what your insurance does and doesn’t cover—including the type of accidents and compensation payments.

Do I need to show my public liability insurance?

Your business is not legally required to display your public liability insurance certificate on its premises or elsewhere.

However, displaying your certificate can be a good decision; it demonstrates that you take public safety seriously. Additionally, if your business works with vendors or contractors, displaying your public liability certificate immediately assures them that you’re insured.

Some parties might only agree to a contract with you after seeing proof that your business is insured, so keeping your certificate somewhere easy to access is a good idea, even if it’s not on display for everyone to see.

By the way, if you employ someone, you are legally required to display your employer’s liability insurance certificate (doing so electronically is acceptable). It’s important to clearly list it in your employee policies and ensure employees can conveniently access it.

What types of businesses get public liability insurance?

Any business that has some contact with the public may need public liability insurance. For example:

• Businesses with physical stores, such as grocery, pet, and jewellery stores. If someone slips and hurts themselves in your store, or if their belongings get damaged, they might raise a claim against your business.

• Businesses that work at open sites or venues. Think of builders or bricklayers at construction sites, where serious accidents can happen.

• Self-employed people, such as electricians, plumbers, carpenters, etc. Working on a building’s framework, pipes, or wiring can all lead to accidental damage or injuries. 

How your business operates, and its level of interaction with third parties, determine the type of accidents that can happen and the amount of coverage you might need. Howden Insurance offers public liability insurance for the following types of businesses:

• Bricklayers
• Builders
• Carpenters
• Car valeters
• Cleaners
• Contractors
• Electricians
• Freight forwarders
• Gardeners
• Gas engineers
• Groundworkers
• Handymen
• HVAC engineers
• Landlords
• Limited companies
• Manufacturers
• Market traders
• Mechanics
• Painters and decorators
• Personal trainers
• Plumbers
• Roofers
• Shopfitters
• Sole traders
• Steel fabricators
• Subcontractors
• Tree surgeons
• Scaffolders
• Self-employed workers
• Welders
• Window manufacturers

How much does public liability insurance cost?

Public liability insurance can cost as little as £5 a month, but the amount you’ll pay depends on several factors, including:

• Your business’s type. Some businesses have more direct interaction with the general public, and some might have a “riskier” operating model (e.g., dangerous tools involved in day-to-day work) than others. Insurers generally charge a premium if they consider a particular business to be riskier.

• Location. You may be charged more if your business operates in an area with higher footfall.

• Your organisation’s number of employees.

• How much coverage you opt for. Coverage options generally range from £1 million to £10 million, with £1 million, £2 million, and £5 million being popular choices.

• Your payment plan, such as annual payments or monthly instalments.

How much public liability insurance do I need?

Most of the factors that insurers consider when deciding how much to charge you can also give you an idea of your insurance needs.

For example, if your business works with potentially dangerous tools, has a large number of employees, involves lots of interaction with the general public, or is located in a high-footfall area, you might need more cover.

Here are some additional factors that are important to consider:

• Trade bodies and associations in your industry. In some industries, trade bodies require your business to meet a minimum threshold of coverage for regulatory compliance.

• Claims frequency. Claims frequencies are higher in some industries, and each business may have different claims frequencies within a specific industry. It’s worth reviewing your business’s claims history and comparing it to similar organisations. Your insurer may charge a premium if you have a higher claims frequency.

• Contracts with third parties. Other businesses that yours might work with may require you to have a minimum level of public liability coverage before they agree to sign the contract.

Are you looking for public liability insurance cover to support your business? Get in touch with us! A member of the Howden team would love to help you find the perfect policy!

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What other types of insurance do UK businesses use?

Public liability insurance covers you for various claims made by third parties, but it doesn’t apply to every claim. That’s why many UK businesses choose additional types of insurance, such as employer’s liability and:

• Professional indemnity insurance. This type of insurance is commonly referred to interchangeably with public liability insurance. However, they are two different types of insurance.
  
  Public liability insurance covers claims made against your business by third parties for injuries or property damage resulting from your business’s operations. In contrast, professional indemnity insurance covers claims made against your business for professional negligence, errors, or omissions in your services.
  
  Any business that provides a professional service—including self-employed persons and freelance workers—is liable to be sued if their client is unhappy with the work they’ve delivered.
  
  
• Product liability insurance. If your business designs, manufactures, or supplies a physical product that’s sold (or even given away for free), you may be liable for any injuries or property damage caused by a faulty product. In such cases, public liability insurance won’t cover it—but product liability insurance will.

How can I get a public liability insurance quote?

You’ll need to get in touch with an experienced insurance broker such as Howden to get a straightforward, accurate quote for public liability insurance. You can contact Howden over the phone or visit one of our branches in the UK.

We’ll need some information to give you a quote, including:

• Some specifics of your business, including its name, location, and industry.

• Claims frequency. The history of any previous claims made against your business.

• How much cover you need, and any additional cover options that you’re interested in, such as product liability or professional indemnity insurance.

• Your contact information, so we can get back to you with the best available policy options.

Once you’ve shared this information, we’ll compare policy options and source a public liability quote tailored to your business’s needs and expectations.

Summary: is public liability insurance compulsory?

Unlike employer’s liability insurance, public liability insurance isn’t a legal requirement for UK businesses to have. However, if your business has any physical interaction with third parties—namely customers, clients, and other businesses or contractors—then public liability can cover claims made against your business by these parties for injuries or damage to property.

Public liability insurance is helpful for various claims made by third parties, but it doesn’t cover everything. For example, accidents to your employees and their possessions, and claims of fault with the products or services your business delivered, aren’t covered by it.

That’s why many UK businesses choose additional insurance—such as product liability, public indemnity, and employer’s liability—in combination with public liability insurance.

Do you have more questions about public liability insurance? You might also want to read:

• What is Public Liability Insurance? (Full Guide)
• The Difference Between Employee & Public Liability Insurance
• How Much is Public Liability Insurance?
• Public Liability Insurance Certificate: All You Need to Know
• Why now is the time to take out Public Liability
• All you need to know about public and product liability insurance
• What Is Liability Insurance? A Complete Guide
• READ MORE BUSINESS INSURANCE GUIDES