What Is Public Liability Insurance for the Self-Employed?

What is public liability insurance for self-employed professionals and do you need it for your business?

Find out more about self‑employed insurance in the UK, what the policy covers and how much it costs.

What Is Public Liability Insurance?

Public liability insurance is a business insurance product 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. 

Put in simple terms, public liability insurance will cover you and your business if a third party is injured or affected by the work you do. This could include the following:  

• An incident in your place of business—someone tripped and injured themselves in your office;
• Accidental damage you have caused to the client’s property, such as scratching their furniture;
• Inadequate or low-quality work that results in damages to the client’s property. For example, a plumber has incorrectly connected the home to the mains causing a flood or water leak;
• Injury or damage to an unrelated third-party—if debris falls off scaffolding while you are carrying out construction work and hurts a passerby on the street or a stand falls on a guest at an event your business is organising. 

Public liability insurance for a sole trader or self-employed individual is usually offered as part of a self-employed business insurance package, which comes with Tools, Stock and Business Equipment Insurance and Professional indemnity insurance (more on this below). However, some insurers offer public liability as a separate cover, allowing you to tailor your policy according to the needs of your business. 

Who Needs Public Liability Insurance?

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

As your own boss, it is up to you to get covered against compensation claims that could seriously damage your business. What’s more, having public liability insurance in place makes you seem more responsible in the eyes of the client, which in turn, can help you secure a job faster. 

Remember that even though public liability insurance is not a legal requirement for businesses in the UK, it is a necessity. Claims, even unfounded ones, can cost you hundreds or thousands of pounds in legal fees and compensations. 

Do I need public liability insurance if I work from home?

If you have clients visiting your office, even if it is located in your home, there is risk of injury so you will need to have self-employed public liability insurance in place. Similarly, if you are a contractor or painter using your home as a base for your business, self-employed insurance is a good idea as it will cover you in case of accidental damage to your customer’s property. 

What Does Self-Employed Public Liability Insurance in the UK Cover?

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

Here’s what the most self-employed public liability policies cover.

Bodily Injury

This type of insurance helps cover medical expenses and any related costs in case of an injury. Let’s say someone slips and falls on a wet floor in your office or one of your cafe employees spills hot coffee over a customer—your insurer will reimburse the costs.

Property Damage

Public liability insurance covers the cost of repairing or replacing the client’s damaged property. So if you spill paint on your client’s expensive carpet while painting their home, your insurance will pay for the cost of replacing said carpet. 

Legal Expenses

If you are taken to court, your public liability insurance policy will cover legal fees and expenses. Often, the policy includes access to a legal helpline that can provide advice at any time of the day.

How much of your legal costs will be covered depends on the nature of the claim. For instance, AXA, one of the biggest insurance companies in the UK, covers legal expenses up to £1m for damages to third parties and £250 for each day you attend court in defence of your claim. 

Compensation 

Last but not least, public liability insurance will cover the cost of compensation when you need to settle a claim. The amount you get coverage for varies from one insurer to the next—Aviva for example, offers flexible cover, whereas Direct Line for Business has policies with up to £10m cover. You should carefully read the terms and conditions of the policy to find out if the cover provided is enough to meet the needs of your business. 

Note: Public liability insurance does not cover injuries to your employees that occur during their line of work. If you have employees, you will need employers’ liability insurance.

How Much Does Self-Employed Public Liability Insurance Cost in the UK?

In general, public liability for self-employed professionals and sole traders costs between £50 and £100 a month. However, how much you pay in monthly or annual premiums depends on your unique circumstances, such as 

The type of business

Businesses that use a lot of equipment, especially dangerous equipment, are considered as higher risk and therefore will pay more for their premiums. Similarly, a business that interacts with clients on a regular basis (i.e. a lot of clients visit your business premises) and sole traders that carry out work on the client’s site (painters, plumbers, electricians) will have higher premiums. 

Where you do business is also an important factor. If you regularly come into contact with members of the general public, such as doing construction on busy streets, the risk of injury is higher and so is the cost of your policy.

The size of your business

Naturally, bigger companies with more employees will get a bigger quote than sole traders since the higher number of workers increases the likelihood of someone making a mistake that can result in injury or property damage.

Your claims history

The number of claims you make also affects your premium. Insurers tend to look at a customer’s claim history in the last five years when determining the cost of your policy—this rule applies both for home insurance premium calculations and business cover estimations.

Turnover

If you have a high turnover, the insurance company assumes that you either work with a lot of clients or have expensive contracts (or both). Either way, they will increase your premium since any possible claims you make will result in a higher payout.

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

As mentioned in the starting, a public liability policy for self-employed professionals is usually offered in combination with other types of business insurance, including the following.

Professional Indemnity Insurance

This type of insurance protects the work business owners do. In other words, if a client takes up legal action or makes a claim against you for loss of earnings or damages to reputation resulting from the service or product you provide, professional indemnity insurance will cover the costs. 

Employers’ Liability Insurance

An employer’s liability cover of at least £5m is a legal requirement for any business that has employees (whether they are part-time or full-time). The policy will pay for the costs if an employee is hurt or gets ill as a result of the work they do for you. 

Tools, Stock and Business Equipment Insurance

As the name implies, this type of insurance reimburses you if a piece of equipment crucial for your business is broken or damaged beyond repair. The policy can also cover possessions belonging to a client (while they are in your care). 

Products Liability

If you manufacture, sell or distribute goods, products liability insurance will protect you against claims for faulty products. This insurance product is usually sold as an optional add-on to a standard business insurance policy.

Personal Accident

This is another extra covering the costs to your business if you are unable to work, though, it is only necessary for businesses that rely solely on the owner.

Bottom Line: Is It Worth Having Public Liability Insurance?

Yes. Accidents can happen, no matter how careful you are. From scratching a client’s car while fixing the garage to having a customer fall and twist their ankle in your office, you need to be covered for all possible situations. In addition to protecting your business financially, public liability insurance will give you peace of mind and boost your reputation as a responsible business owner. 

Just make sure you find an insurance company that can meet all your needs—compare as many quotes as possible by contacting the providers themselves or using the services of an independent insurance broker.