The modern day entrepreneur faces a number of unique challenges when starting a new business beyond simply making it successful. One of the major hurdles is evaluating and protecting your business against unforeseen risks.
Fortunately, there are a variety of insurance products that provide a safety net in the event of a lawsuit. Some, such as employers’ liability insurance, are compulsory by law for any business that employs a staff. Other insurance products, such as professional indemnity, restaurant, or office cover, are unique to certain professions. However, most businesses will need some form of insurance to protect them in the event they are liable for injury or property damage to a client. This is known in the industry as public liability insurance.
Public Liability Insurance
An essential cover for any business, public liability insurance is designed to safeguard your business against a lawsuit brought about by third party individuals. This includes interactions with clients, customers, or general members of the public. Any business that deals with outside parties, regardless how limited their exposure, is at risk for such a claim.
Typically, a public liability insurance policy will aim to cover the following:
- Legal fees and representation
- Medical bills and payments to the NHS
- Compensation due to the claimant
Examples of Public Liability Protection
The following are two examples where public liability insurance can protect your business:
- A self-employed computer technician is hired by a company to do an examination of the network systems, when he accidentally spills hot coffee on one of his client’s desks. The coffee burns the client and spills on his tablet computer, damaging it irrevocably. In this instance, the technician is liable for both the client’s injuries, the cost of the computer, as well as the loss of any data stored on the device.
- An electrician is hired to change the fuses for an corporate building, but accidentally damages the wiring, causing a power outage. As the corporation relies on having power to run its business, the resulting downtime could result in huge losses for the company.
Given the high cost of medical and legal representation and the potential for large scale liability, many professions require coverage of anywhere from £1 to £10 million in order to do business. For other companies, the purchase of public liability insurance may not be mandatory, but clients will often use it to determine whether a business is legitimate. Not having a public liability policy can not only put your company at risk, but reduce the amount of opportunities you have for increasing your client base.
Cost of Public Liability Insurance
Most insurers will offer insurance in exchange for a monthly premium that varies depending on the type of business you run. While generally the cost will be in the neighbourhood of similar business types, an agent may wish to go over your specific operations and deduce whether that raises the level of risk. Your claim history will also affect the amount of your premium, as will the amount of your excess. Conversely, your business may present less of a risk than similar business types. In this instance, it may be wise to go over such options with a broker, as an insurance agent may not have the incentive to do so.
You can take various measures to lower your insurance costs by lowering your level of risk. For example, offering safety courses and training to employees will help reduce the odds of an accident. Installing safer equipment or other technical measures may further decrease costs, especially if they are above and beyond what is required by law. Shopping around online for quotes can also yield a better rate, as long as you confirm the insurance company is a member of the Association of British Insurers (ABI).