Public liability insurance explained

Public liability is also known as third party liability insurance. It provides protection against your legal liability to third parties, following injury or property damage caused in the course of your business. Members of the public can make a claim against your company for damage to their property, or personal injury.

Employees of your company cannot claim under public liability. This is because your employees are insured under your employers’ liability insurance. But any other person(s), business, charity or organisation can claim against any other’s public liability insurance.

What is a public liability claim?

It’s important to note that for most liability claims to be met, negligence has to be proven. This means that your business has to be proven to be at fault for causing the damage or injury. It usually doesn’t matter if the act could have been prevented, claims can still be made if the damage or injury was caused by your business’s activities.

However, just because someone says that you have injured them or damaged their property, it doesn’t mean that you are liable. Claims that are made against your company can be disputed. And most liability insurance policies will help you defend against genuine and false claims. You can also use an insurance broker that has its own claims management department.

Where does public liability insurance apply?

If you have commercial package insurance for a specific type of business like a shop, office or restaurant, it should include public liability. The majority of claims are likely to be for injuries like slips, trips and falls at the main business address.

However, if as part of your business activities, you work away from the business address you need to make sure your cover is extended. For example, a shopkeeper may travel to make deliveries, so their public liability cover would need to be extended to cover these activities. This means that if they caused damage at a third party business whilst making a delivery, they would be covered.

If you undertake additional activities, particularly manual work, you need to make sure you have the appropriate cover. For example, a home furnishing business may make deliveries for which they are covered under their public liability policy. But if they decide to start providing measuring and fitting services, the current cover may not be adequate, because these types of activities increase the chance of a public liability claim.

If you need to extend your cover, you can speak to your insurance broker. Do check what your third party property damage excess will be when you do this, and shop around for the best deal.

Territorial limits

Most public liability policies contain what are known as territorial limits. This means that your cover applies to certain areas. If you are likely to extend your business activities overseas, you will need to make sure you are covered to work in there. There are usually four set territorial limits:

  • UK
  • EU
  • USA
  • Canada
  • Rest of the World

Liability claims in the USA and Canada can be much costlier, and so not all insurers will cover you for this.

For any changes or extensions to your policy, or if you’re not sure what you’re covered for, speak to your insurance broker.