What Is Public Liability Insurance?

Insurance Blog

Public liability insurance is a type of business insurance that protects companies and sole traders from damages in the event that they are found liable to have caused damage to any member of the public. The damage can relate to physical damage, such as loss of life, or it can relate to bodily injury, property damage, or financial damage.

Public liability insurance is a legal requirement for a small number of companies, but on the whole, it is considered a commercial decision for businesses. It is, however, often required by contractors, clients, and other associated businesses, and given that the cost is normally fairly reasonable when compared with other types of commercial insurance, it is widely accepted that most businesses will have such a policy.

Who needs public liability insurance?

Anyone who runs any type of business of any size where the company is in contact with a member of the public could need some type of public liability insurance.

This would cover anyone who owned a business that had premises that were visited by members of the public, a business that organised any event or activity off-site that included the public, or a business that has someone working from home where members of the public would visit them.

This type of insurance is also needed by people who visit other people's homes in the nature of their work, such as plumbers, builders, and many other tradies.

During the recent pandemic, many people have been working from home, and although they may not have been receiving visits from the public, working habits are changing and more people may be working from home in the future, meaning that they may need to have some type of public liability insurance policy in place.

Workers' compensation insurance

It is important to note that public liability insurance does not cover an employer's liability to their own employees, whether they are working from the business premises or in someone's home, although many employers assume that it does.

Virtually all employers are required by law to have some type of workers' compensation insurance, which will provide financial assistance to an employee who is injured or becomes sick at work as the result of the business of the employer.

Other types of business insurance

Public liability insurance is quite clear and focused in terms of its policy coverage, but it does sometimes get confused with other types of business insurance, such as product liability insurance and professional indemnity insurance, or errors and omissions insurance.

Part of this confusion arises because a number of insurance companies provide one specific policy that covers both public liability and product liability insurance. Whilst this may be convenient to some businesses, many do not need product liability insurance, which is in effect simply an additional cost.

Professional indemnity insurance, or errors and omissions cover, could in theory provide some type of cover similar to public liability insurance, but it is normally much more expensive and is designed for a very different purpose. The intent of these policies is to provide cover for professional people and directors of companies against negligence or dereliction of duty in the carrying out of their work.

Share

21 September 2021