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What Is Public Liability Insurance for the Self-Employed?

Written by, Marija Petkova

Updated May, 4, 2022

As a self-employed individual, you likely know that certain risks are associated with your job. The best way to protect your finances and work is to get self-employed business insurance.

But, what is public liability insurance for the self-employed, what does it cover, and how much does it cost?

Let’s find out.

What Is Public Liability Insurance?

Public liability insurance (PLI) is a type of insurance that covers claims by the general public (customers, clients, and delivery personnel) stemming from accidents, deaths, or property damage caused by your company’s business activities. 

Who Needs PLI?

Self-employed public liability insurance is essential for sole traders, small business owners, and contractors that regularly deal with customers and clients.

While there are many circumstances that can lead to a self-employment/ sole trader insurance claim, the main trigger, in most situations, is negligence

For example, if you accidentally knock over a mug of coffee and damage a client’s laptop or a customer slips or trips at your premises because there was no wet floor sign on display, your PLI policy will cover the costs of any legal fees or compensation in case of a lawsuit.

Benefits Of Using Public Liability Insurance

Getting public liability insurance for a sole trader is crucial for any type of small business owner, sole trader, or self-employed individual because it :

  • Provides financial protection for your business: It covers legal costs if a visitor or client sues you for injuries or property damage because of your business’s activities.

Even if it doesn’t pay for the entire sum, it can provide key financial assistance and potentially save your business from going under.

  • Helps secure a job: In addition to covering costs, getting public liability as a self-employed worker can help you secure a job. Although it is not a legal requirement, some companies and clients may ask you to have a policy before you can begin to work. 
  • Boosts reputation: Self-employed public liability insurance in the UK can help establish your business as reputable. A PLI policy provides assurance to clients that any property damage will be covered in case of an accident.

How Much Does Public Liability Insurance Cost in the UK?

The cost of self-employed public liability insurance varies depending on the size and type of business, as well as the level of risk associated with your business and your claims history.

For example, your premiums will be higher if you have a lot of visitors, a high turnover, or if you use a lot of equipment.

Depending on these factors, a sole trader public liability insurance in the UK can cost as little as £55 and find policies that include up to £10 million of cover.

What Does Self-employment Public Liability Insurance Cover?

Liability insurance for self-employed individuals covers costs, legal fees, and compensation for injuries or property damage resulting from your business activities. 

Here’s what the most common public liability insurance for self-employed workers covers in case of third-party claims:

Bodily Injury

This type of insurance helps cover medical expenses and any related costs in case of an injury.

Property Damage

It will pay for damage to property in case of a mishap. For example, if you run a cafe and one of your employees spills a drink on a customer’s belongings, your insurance will cover the expenses.

Legal Expenses

PLI also covers the cost of legal fees if someone sues you and takes you to court (though this is rarely the case with types of claims related to PLI). 

Do I Need Public Liability Insurance If I Work From Home?

If you have clients that visit your business premises, regardless of whether it’s a separate business office or you’re working from home, you’ll need to have self-employed public liability insurance.

What Factors Affect the Cost Of My Public Liability Insurance?

Self-employed insurance requirements differ from one insurer to another, however, most insurance providers take into consideration the same factors to determine the price of your premiums. 

They mainly look at: 

Occupation

Businesses that use a lot of equipment, including dangerous equipment, are considered a higher risk. 

Visitors

If you generally have a lot of visitors on your business premises, insurance providers will give higher premiums, since there’s a higher chance that an accident can occur.

Number of Employees

The number of people employed by your firm will affect the cost of insurance since more employees mean an increased likelihood of someone making a mistake that can result in injury or property damage.

Number of Clients

If you deal with many clients or have pricey contracts, you’re dealing with both types of risk, which means your insurance risk is more significant.

What Other Types Of Insurance Do Self-Employed People Need?

In addition to self-employed public liability insurance, there are other types of coverage that self-employed individuals might benefit from, including:  

Professional Indemnity Insurance

This type of insurance protects businesses owners when clients sue them for negligence, error, or omission in providing professional service. Unlike public liability insurance for the self-employed, professional indemnity insurance protects you from claims made by clients who say they’ve suffered financial losses because of your work. 

Employers’ Liability Insurance

The difference between this insurance and public liability insurance for a small business is that it’s aimed toward the employees and is a legal requirement. It pays for the damage, compensation costs, and legal expenses that a current or former employee is entitled to due to an illness or injury incurred at the workplace.

Extra Policies

Other policies that small business owners and sole traders might want to consider are:

Business Equipment

If you use devices for work, like a computer or mobile, they might not be covered under your home contents insurance. Self-employed individuals who want to protect their business equipment might be able to add it to their policy.

Vehicles And Goods In Transit

If you use a vehicle for business purposes and carry goods for third parties, you can insure the vehicle and the goods you carry.

Products Liability

This is a great cover for businesses that manufacture, sell, or distribute products. It covers any costs related to injuries or damages resulting from a faulty product.

If you want to learn when do you need product liability insurance, take a look at this insightful guide

Personal Accident

If the business you’re running relies explicitly on you, you should think about how your earnings would be affected if you were unable to work due to an accident. If you have personal accident cover and that happens, your accident policy would pay your wage until you recover.

Bottom Line

Self-employed insurance, whether it’s sole trader liability insurance or insurance for small business owners, is an excellent choice for individuals who want to protect their business and themselves from the financial impact of an accident that results in a client or visitor’s injury. 

In addition to coverage, the main advantage of sole trader public liability insurance is that it can help workers secure a job.

                           

Frequently Asked Questions And Their Answers

Do I need public liability insurance if I am self-employed?

Businesses need PLI if they get a lot of visitors or deal with a good number of clients on a regular basis. This type of insurance isn’t required by law, but most companies refuse to work with individuals that don’t have PLI.

Is it worth having public liability Insurance?

PLI can help save small business owners from financial ruin and get a job if a client requires having PLI.

What is the difference between personal and public liability insurance?

Personal liability insurance protects you against third-party claims for damage or injuries.

On the other hand, public liability insurance or sole trader liability insurance is the business version of this type of insurance. It covers compensation costs if someone makes a claim against your company for injury or damage.

Is general liability the same as public liability insurance?

Yes and no. General liability insurance is the American term for PLI but it also provides more extensive coverage and covers a broader range of potential legal issues. 

What is public liability insurance for the self-employed?

It’s a type of policy that protects businesses from injury and property damage claims stemming from an individuals’ business activities. It’s a necessity for small business owners, sole traders, and self-employed individuals.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.