23 August 2021

4-minute read

What does public liability insurance cover?

A cup of coffee spilled on a client’s keyboard.

What does public liability insurance cover? If a member of the public successfully claims you or your business injured them, public liability insurance can cover the legal costs along with any financial damages that you may be liable to pay. It may also protect you if you’re accused of damaging their property while carrying out your services.

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What incidents does public liability insurance cover?

Public liability insurance covers claims brought against you by members of the public who interact with your business.

Examples could include:

You’re a builder who accidentally knocks over machinery onto a passing cyclist. The cyclist could claim for injury caused along with damage to their bicycle, and any loss they incur from not being able to work afterwards. In these cases, your public liability insurance could help cover you for the cost of damages and medical bills, along with the lost earnings.
You’re a painter and decorator who accidentally knocks a tin of paint over a brand new carpet while decorating inside a customer’s home, resulting in property damage. You could claim on your PL insurance policy to cover the cost of compensation for the damages.

What is public liability insurance? Find out more.

What costs does public liability insurance cover?

Public liability insurance typically covers two main types of claim – third-party injury and third-party property damage. Public liability insurance can help cover you for your legal fees, along with any loss of earnings to the claimant. It’ll may also help cover you for any fees incurred to repair the claimant’s property or personal belongings that they believe were lost or damaged as a result of your business activities.

Public liability and third-party property damage

Public liability and third-party property damage insurance work hand in hand. Public liability cover is designed to respond when your business activities cause physical damage to a third party's property, whether that's a client's laptop, a customer's flooring, or a neighbour's fence. The cost of repairing or replacing damaged property can quickly escalate, particularly when high-value items or specialist equipment are involved.

For example: you're an electrician rewiring a kitchen and accidentally damage an integrated appliance in the process. The homeowner makes a claim against you for the cost of replacement. Or you could accidentally spill coffee over a clients laptop, or, if you work as a tradesperson, you could cause damage to someone’s home whilst working on a job.

Public liability and property damage insurance can help cover the compensation and any associated legal costs, so you're not left to fund it personally.

Public liability and third-party personal injury insurance

Public liability and third-party personal injury insurance are closely linked. The personal injury element of public liability cover responds when someone, perhaps a customer, client, or member of the public, is physically injured as a result of your business activities and makes a claim against you. This could cover everything from slips and trips on your premises to injuries caused by your tools, equipment, or products.

For example: you run a fitness class and a participant trips over an exercise mat you've left in the walkway, injuring their wrist. They pursue a personal injury claim. Your public liability insurance can help towards covering their medical costs, any loss of earnings they claim, and your legal costs in defending the case.

What is not covered by public liability insurance

Public liability insurance does not cover everyone and everything. Key exclusions include:

Your own employees: if a member of staff is injured or becomes ill due to their work, that's covered by employers' liability insurance, not public liability. This includes temporary staff and anyone on work experience.
Claims against your professional advice or services: if a client suffers a financial loss because of advice you gave or a service you provided, you'll need professional indemnity insurance.
Accidents that happen to you: if you're injured in the course of your work and can't earn, public liability won't help. Occupational personal accident insurance is the relevant cover for this.
Damage to your own property: public liability only covers damage to other people's property, not your own business equipment or premises.
Fines and penalties: public liability insurance does not cover court-imposed fines or regulatory penalties of any kind.
Environmental claims: damage or liability arising from pollution or environmental incidents is not covered under a standard public liability policy.

Take a look at our other forms of small business insurance to see if there are more policies that are appropriate to you and your business.

How much public liability insurance do I need?

Typically speaking, public liability insurance cover provides businesses with different cover limits ranging between £1m and £10m. This limit represents the maximum amount that your provider will cover in the event of a claim being made against your business. However, knowing how much cover you need to take out is not always straightforward.

It’s important to remember that if a third-party individual makes a claim against your business, you might be ordered to pay compensation. This could be for anything from a potential loss of earnings to medical costs, including future care. You may even have to cover both your legal fees and those of the person suing you.

So, to establish how much PL cover you need for your business, there are a number of deciding factors you need to consider. These include:

Business size

The size of your business is one factor which will determine how much cover you require. However, the nature of your business’ work and the amount of physical contact with the public this work needs is a better indicator of how much public liability insurance cover you’ll need.

Contact with the public

If members of the public interact with your business on a regular basis, you may want to consider public liability insurance. You may be a painter and decorator, or run a plumbing business which requires you and your employees to regularly visit people’s homes. If so, you’re likely to have a high-risk public liability profile, requiring a larger PL policy. However, if you deal with clients and customers over the phone or online, you would be considered low-risk and need less cover.

Contract details

Some of the clients you work with may require a level of public liability insurance cover from all businesses that they work with. This will be in your contract with them and is not unusual. For example, live performers and DJs, who are booked to work at a number of specific venues, will need a public liability policy that covers each one.

Industry risk

Consider the type of work your business does. If you carry out potentially dangerous tasks or use materials and equipment that could injure individuals or damage personal property, you’re going to require more PL cover than a business that operates in an industry that poses few risks.

Trade bodies and associations

Many industries are heavily regulated and have associated trade bodies, meaning you may need public liability cover to be a member. It’s worth checking to see how much public liability cover you’ll need.

Previous claims

Have you made claims in the past? If so, your insurance provider may consider you more of a risk than a company that hasn’t made any claims and the size of your premium will reflect this.

How much is public liability insurance?

Frequently Asked Questions

Who is covered by public liability insurance?

You and your employees will be covered by your public liability insurance policy. This directly relates to anything that a member of the public claims you or your employees did that resulted in injury, illness, damage, or loss to them while on your property or partaking in your business activities.

This type of cover is typically relevant for businesses that interact physically with third parties. It may be less relevant for fully remote or advisory businesses.

Does public liability cover third-party personal injury

Yes. Public liability insurance covers personal injury claims made against your business by third parties. If a customer, client, or member of the public is injured as a result of your business activities and holds you responsible, public liability insurance will cover the cost of their medical bills, loss of earnings, and your legal costs in defending the claim. It does not cover injuries to yourself or your own employees.

Does public liability insurance cover damage to property

Yes. If you damage a third party's property in the course of your business activities, public liability insurance will cover the cost of a claim made against you. This includes damage to a client's premises, a customer's belongings, or a third party's equipment. It does not cover damage to your own business property. For that, you would need an office or business contents insurance policy.

Does public liability insurance cover contractors

Public liability insurance can cover contractors in the same way it covers any other business: protecting against claims from third parties who are injured or whose property is damaged as a result of your work. If you are a self-employed contractor or work through a limited company, your own public liability insurance policy covers your activities. If you engage subcontractors, it is worth checking your policy terms, as their activities may or may not be covered under your policy depending on how they are engaged

Does public liability insurance cover workers' compensation?

No. Public liability insurance does not cover compensation claims made by your own workers or employees. Workers' compensation in the UK is handled through employers' liability insurance, which is a legal requirement for any business that employs people. Public liability insurance covers claims from third parties outside your business, such as members of the public, clients, and customers - not from people who work for you.

Is having public liability insurance part of my business compliance?

Although having public liability insurance in place is not usually a legal requirement, it is a wise choice for most businesses who interact with the public in one way or another.

Is public liability insurance tax deductible?

In many cases, yes, but this depends on your circumstances and applicable tax rules. If deemed an ‘allowable expense’, this means you can deduct the cost of your premium when calculating your taxable profit for the tax year.

Do self-employed people or freelancers need public liability insurance?

If you host clients or visit them in their premises – whether that’s in a home, an office building or at a shared workplace - public liability insurance is important. It provides cover if the worst should happen, and it demonstrates you’re serious about maintaining a positive professional relationship.

Why should I choose Markel for public liability insurance?

With over 25 years’ experience in the business insurance market, you can trust Markel Direct when it comes to robust, reliable financial protection. Our experienced solicitors are available 24 hours a day, 7 days a week to give you legal advice when you’re facing a legal claim. There are no hidden fees either – we’re completely transparent when it comes to cost and if you want to change or cancel a policy, you won’t be charged any extra fees.

You can also get a public liability insurance quote in as little as 90 seconds when you fill in our easy online form. Just use the button below or call our team today on 0800 640 6600 to discuss your needs.