Do I Need Public Liability Insurance? A Guide for UK SMEs

Even a minor accident can have serious consequences for a small business. A client slipping in your shop or a contractor accidentally damaging a client’s property could lead to significant legal costs.

Public liability insurance (PL) can help manage these risks, covering circumstances for which the Insured is legally liable, primarily through it’s negligent acts.

The point: Thinking about risk before it happens is what separates businesses that recover from those that struggle.

“One of the most common types of business insurance, public liability covers your responsibility to third parties. It protects you from suffering financially if a claim is made against you or your business in respect of loss or damage to third-party property or people because of your negligent acts.”

Who Might Find PL Insurance Relevant?

If your business interacts with clients, customers, or the public, PL insurance may be relevant.

Examples include:

• Builders, plumbers, electricians.
• Hairdressers, therapists, beauty professionals.
• Event organisers, caterers, market traders.
• Shops, cafés, restaurants.
• Freelancers visiting client sites.

Even home-based businesses may face risks if clients visit or products cause harm.

Note: Whether PL insurance is suitable for your business depends on your individual circumstances. Seek guidance from an experienced broker.

What Does PL Insurance Typically Cover?

Public liability only covers damage or injury if you are legally liable, here are some typical risks PL might help with;

• Injury claims: Slips, trips, or falls.
• Property damage: Accidental damage to client property.
• Legal costs: Defending claims in court.
• Compensation payments: If found liable.

Usually not covered:

• Employee injuries (Employers’ Liability Insurance covers this, but only if you are legally liable, it’s not personal accident cover).
• Damage to your own property or stock.
• Professional errors (Professional Indemnity Insurance).

How Much Cover Might Be Considered?

• Many SMEs might consider £5 million as a starting point.
• High-risk businesses (construction, events, trades) may look at more.
• Clients or contracts may require a minimum level of cover.

Important: Only a qualified broker can advise on the right level of cover for your business.

“Public liability insurance covers anyone, apart from employees, with whom you interact as part of your business operations…”

Why Consider PL Insurance

Managing risk proactively can give business owners peace of mind. PL insurance is one tool that can help:

• Reduce financial exposure from accidents or damage.
• Meet client or contract requirements.
• Support business continuity in case of a claim.

Remember: PL insurance cannot remove all risk. Decisions about cover should be made with a experienced insurance professional.

✅ Next Steps for SMEs

• Identify how your business interacts with clients or the public.
• Review client and contract requirements.
• Compare limits and premiums relevant to your sector.
• Speak to a experienced insurance broker for tailored guidance.

FAQ: Public Liability Insurance for UK SMEs

1. How much public liability insurance do I need?

The right level depends on your business activities, sector, and contract requirements. Many small businesses start with £5 million, while higher-risk businesses (construction, events, trades) may consider much more. Always confirm the required cover for your contracts and speak with a experienced insurance broker.

2. Do home-based businesses need public liability insurance?

Even if you work from home, you may still need PL insurance if:

• Clients visit your property.
• Your products or services could cause harm.
• Contracts or agreements require it.

Not all home-based businesses face the same risk, so it’s important to assess your specific circumstances with a broker.

NB: Don’t just rely on your home insurance you may yourself not covered.

3. Is public liability insurance legally required in the UK?

In general, no. Public liability insurance is not a legal requirement for most UK businesses. However, certain industries or activities may require it, and contracts with clients or councils often insist on it.

4. What’s the difference between public liability and employers’ liability insurance?

• Public Liability Insurance (PL): Covers claims from clients, customers, or the public for injury or property damage caused by your business, for which you are legally liable.
• Employers’ Liability Insurance: Covers injuries for which you are legally liable to employees, part-time, volunteer or family member. It is a legal requirement.

Both types of cover may be needed depending on your business activities.

5. Does public liability insurance cover subcontractors?

Usually not. If you hire subcontractors, check that they have their own insurance or ask your broker whether you can include them in your policy.

6. Can PL insurance help with contracts or tenders?

Yes. Many businesses, local authorities, and clients require proof of public liability insurance before awarding contracts. Having the right cover can make your business more competitive and credible.

7. What if I don’t have any clients or public interaction?

Even businesses with minimal client contact could face claims, for example:

• Online products causing harm
• Delivery services
• Accidental damage through business operations

A broker can help assess whether PL insurance is relevant for your specific risk profile.

The Bottom Line

• There is no one-size-fits-all amount of cover. Consider business type, risk, and contracts.
• Even home-based or low-contact businesses may need PL insurance.
• Public liability is usually not legally required, but contracts and industry standards often make it necessary.
• Always consult a experienced insurance broker to ensure coverage is appropriate.

Call 020 3883 7976 or visit fsb-insurance-service.co.uk to discuss your business’s individual needs.

This content is for general information only and is not intended to provide advice or a personal recommendation. Insurance cover is subject to the terms, conditions, and exclusions of the policy. Always consider your individual circumstances and seek professional advice before arranging insurance. External websites are not under our control and we are not responsible for their content.