The average cost of public liability insurance in the UK is £118 annually. This varies from business to business, however, with businesses in some industries paying as little as £50 per year, and others paying up to £450 or more. This would cover you for a limit of £2M in public liability claims – you can opt for higher and lower levels of cover (usually £1M, £5M and £10M) if you should so wish – £5M of public liability, for example, is likely to set you back around £140.
The cost differences are fairly easily explained – riskier industries (where more accidents/incidents occur) cost more to insure for, as insurers feel these companies are more likely to make a claim. On the flip side, less dangerous industries don’t have to pay as much, as insurers don’t believe it’s likely they’ll ever need to make a claim (or, if they do, it’s unlikely to be an expensive one).
The industry is a key driver of cost differences between businesses, but many other factors impact price, too. The size of your business, for example – a company with more employees is more likely to be involved in an incident (using basic probability) than a similar but smaller company, and therefore more likely to need to make a claim. Keep in mind that a larger business in a less risky market (say, dog walking) still might find its costs lower than smaller businesses in riskier markets (say, scaffolding), so it’s probably best to compare your costs to other businesses in your industry, rather than looking across the market.
There will be industry-specific risks that insurers will want to evaluate, too. For example, a gardening business that undertakes tree-felling work is likely to find its quotes more expensive than a similar business that doesn’t offer tree-felling as part of its services, so if there are any parts of your work that are non-typical/’riskier’ than others in the market be prepared to pay a little more.
Who needs public liability insurance?
Simply put, if your business has any in-person exposure to members of the public, customers/clients or other third parties (and their property) then you’ll need public liability insurance. While not a legal requirement in the UK, it may as well be – many customers will not engage you if you don’t hold a valid policy, so don’t be surprised if you get turned down for work without it.
And that’s before even mentioning the risks you expose yourself to without a valid policy. The average settlement in the UK is roughly £13,500, so the costs of being involved in an incident can be severe – ask yourself if you and your business could afford an expensive settlement case and the legal fees associated with it – public liability would cover you for both the settlement and any legal expenses, which is well worth it in the eyes of most businesses.
Industry-wise, it would be impossible to put together a list of every company that might benefit from public liability. The simplest way to think about it to ask whether or not your business comes into contact with the public, customers or other businesses – if the answer is yes, then you’ll probably want public liability just in case something goes wrong.
If you’re still not 100% sure whether you need a policy or not, you can check out this guide by the Association of British Insurers (ABI) for more detail.
What does public liability insurance cover?
Public liability will cover any compensation awarded against your business in court and the associated legal expenses accrued while defending yourself. There are three primary types of accidental damage that your business may cause that will be covered by public liability:
- Bodily injury
- Property damage
- Wrongful arrest
It won’t cover any damages your business incurs during the incident, only those incurred by third parties, so if you’re looking to protect your employees and business then you’ll want more than just public liability – a business insurance package including coverage like employers’ liability, equipment/stock insurance and personal accident cover will create more well-rounded protection.
Cheapest public liability insurance
The best way to get cheap public liability insurance is to shop around the market as much as possible. While aggregators/comparison websites can be useful to help gather as many quotes as possible, keep in mind that many businesses will save their best rates for those who come to them directly, so consider checking out some insurers directly, too.
Another way to save is to opt for lower coverage levels, assuming the lower limit would still be sufficient to cover you in the event of an incident. The average cost difference between £2M of public liability and £5M is just over £20, so not a massive saving for £3M less of cover, but if you are looking to save a little it’s definitely an option.
Finally, while you can’t always change some factors, be conscious of their impact on cost, especially if your quote is significantly more/less than you were anticipating. Your location, age, years of industry experience and the number of people you employ are all examples of things that will play a role in deciding the final amount you pay, so if your company is perceived as more or less risky by insurers across any of these factors don’t be surprised if your quotes are different than the market average.