Public liability insurance, like any business insurance, is designed to keep your business going even when the unexpected happens. Any business that comes into contact with the public (customers, tradesmen, and the general public) should have public liability insurance in place. Incidentally, if the only people your business has any dealings with are its employees then public liability insurance is not necessary but employer’s liability insurance certainly is.
If a member of the public were to sue your business for injuring them or damaging their property, public liability insurance would pay your legal fees throughout the case, so you wouldn’t lose vital business revenue (after all, your business’s money is best spent on the business itself, not on lawyers’ fees).
It will also pay any compensation awarded, or any agreed out-of-court settlement. Out-of-court settlements are generally lower than amounts ordered by a court, but if you didn’t have public liability insurance in place you might not be in a position to be able to afford to make an offer to settle.
Even if you are ultimately successful in a case, if you don’t have public liability insurance in place and have had to pay your own legal fees you might not have them repaid if the other party doesn’t have the money to cover them.
Having public liability insurance is more than just a way to protect your business from the costs of litigation. It is also a way to demonstrate that your company takes its responsibilities seriously and has the financial back-up to put things right if something unexpected did happen.
Sometimes, not having public liability insurance in place can make clients or customers reluctant to deal with you. Certainly work contracted by the public sector (e.g. landscaping work bought by the local authority) will not be offered or given to any business without adequate public liability insurance in place. Government-based contracts usually demand public liability insurance cover of at least £10million (£5million is the usual standard) so if your business is looking for work from the local government or other public bodies then if it’s underinsured you won’t be successful in your bid.
Whether you are self-employed or own a large limited company, you should have public liability insurance in place to protect the future of your business. So if you have any contact whatsoever with anyone who is not an employee then put public liability insurance at the top of your list of priorities and get adequate cover before you need it.