Public liability insurance is just one of several types of insurance available to businesses to take out to protect themselves against compensation claims. If you are starting up a business and are aware vaguely of the need to take out ‘business insurance’ then this is one of the main types you might well need.
It’s voluntary: no-one forces you to take out a public liability insurance policy (unlike employers’ liability insurance, which is compulsory to have in place if you have anyone who works for you or your business). So is it worth having?
If, during the course of your business, you either go onto someone else’s property, have people come to your property, or work in an area that people might pass through or visit then you need public liability insurance. Why?
Well, if you go into someone’s home or office to work on their computer, for example, and accidentally introduce a virus that wrecks the whole network, or you spill your drink on their computer, you’re going to need to pay for the damage.
If you own a shop or have a business (e.g. a beauty therapist) where customers come to your home and they trip over your hall carpet, or slip on your kitchen floor, you’re going to need to pay them some compensation for their injuries.
If you are felling trees in someone’s garden and a branch drops through the roof of the neighbour’s car, you’re going to need to pay to repair the damage (likewise if the branch dropped on the neighbour’s head, you’ll need to pay compensation for the injury or death caused).
If this all sounds like so much worrying over things that might never happen then just remember that accidents do happen but most people in today’s society seem to want to find someone to blame. If your business is a limited company then at least if anyone sues you they will ‘only’ be able to take their compensation from whatever assets the company owns (which might well put you out of business). But if your business is not limited then if there aren’t enough business assets in the kitty to pay any amount ordered in compensation you’ll have to pay out of your private assets – your savings, investments, pension … your home.
Finally, because of the compensation-grabbing culture in this country, even if you are ultimately found by a court to not have been in any way negligent (and therefore don’t owe the ‘victim’ any money), you will have been through months of solicitors’ correspondence and court hearings and paid out who-knows how much in legal fees (not to mention that you will have taken a lot of time off work to deal with it all and may have lost business as a result). Having business insurance, specifically public liability insurance, in place will protect you against all of that. You’ll still need to spend time dealing with the claim, but your insurers will handle a lot of the worry and stress for you and will pay your legal fees. Public liability insurance will pay the compensation ordered and the other party’s costs, too, if you were found to be negligent. It’s well worth having it in place.