Glossary · UK
What is Public Liability Insurance?
Cover that pays compensation and legal costs if a business is found responsible for injury to a member of the public, or damage to their property, arising from its business activities.
Full Definition
Public liability insurance protects a business against claims made by members of the public, customers or clients who suffer injury, or whose property is damaged, as a result of the business's activities, products or premises. A typical claim might arise from a customer slipping on a wet floor in a shop, a passer-by being hit by falling scaffolding on a building site, or a client's carpet being damaged by a tradesperson working in their home; the policy pays the resulting compensation awarded against the business, along with the often-substantial legal costs of defending or settling the claim. Unlike employers' liability insurance, which is a legal requirement for almost all UK businesses with employees, public liability insurance is not compulsory by law for most businesses, though it is frequently required as a contractual condition by landlords, letting agents, event organisers, local authorities and larger commercial clients before they will allow a contractor or supplier onto a site or into a contract, and many trade bodies and professional associations require members to hold a minimum level of cover (commonly GBP 1 million, GBP 2 million or GBP 5 million) as a condition of membership. Sole traders, tradespeople and any business that deals face to face with the public or works on other people's premises are the businesses most likely to need it in practice, even where it is not a legal obligation.