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What is public liability insurance?

The amount of cover you need, how to get public liability insurance, and how much it costs depends on your business. Find out more.

Public liability insurance is one of the more fundamental insurance policies a business needs to have in place. If your business deals with the public – whether you run a hairdressing salon or operate from offices that your clients visit – it’s a good idea to have public liability insurance. And if you’re wondering how much is public liability insurance, the good news is it can be relatively inexpensive.

The amount of cover you need, how to get public liability insurance, and how much it costs depends on the nature of your business and how it operates.

Public liability insurance explained

While public liability insurance isn’t a legal requirement for the majority of UK firms, any business that deals directly with the public should consider buying a policy.

Public liability insurance covers the cost of legal action and compensation claims made against your business if a member of the public is harmed or injured when visiting your premises. It also provides cover against such claims when you or your staff are in a customer’s home or when your business is providing a service in public such as catering or running an event.

For example, if a customer is injured by tripping over office equipment while visiting your business premises, they could make a legal claim for compensation against your business. Compensation claims for injury may run into tens of thousands of pounds, which can have a huge financial impact on a new business.

It’s worth knowing that public liability insurance is a legal requirement if you operate a horse-riding business or your business operates aircraft.

How much is public liability insurance?

The answer to the questions ‘how much is public liability insurance?’ and ‘how much public liability insurance do I need?’ depends on the nature of your business but prices are relatively inexpensive. According to a report by insurer Bought By Many citing AXA research, the average cost of an annual public liability insurance policy is around £120. For start ups and new businesses, the costs can be even lower – as little as £40.

Most of the major insurers claim that costs to smaller businesses are generally low. Expect to pay around £50-£60 as a typical small business from most insurance lenders.

How much is public liability insurance for different types of business?

While insurers claim low average policy prices, for many businesses policy prices can be significantly higher

How much you pay for public liability insurance depends on the nature your business and how you operate. Some of the factors that influence the price you pay include:

  • the size of your business
  • the level of your business’s interaction with the public
  • the level of risk to the public – for example, does your business operate dangerous machinery?

For example, the cost of public liability insurance for a takeaway restaurant will be far greater than for a retail shop selling shoes or a tutor offering lessons. That’s because there is more chance of a customer being injured with some businesses, such as sustaining burns or contracting food poisoning for example.

Public liability insurance costs vary but typical annual prices for different businesses are:

  • Takeaway restaurant (£100k turnover, no deep fat fryer, no alcohol licence) – £1,500
  • Hairdressing salon (£75k turnover, non-invasive treatments, qualified staff) – £350
  • Retail shoe shop (£50k turnover, non-shoe repair) – £200
  • Tutor (£50k turnover, visiting or hosting lessons, qualified staff) – £65


How is public liability insurance calculated?

How much you’ll pay for public liability insurance for your business is impacted by many factors in addition to the type of business you run. When getting a quote, be sure to answer questions about your business as fully as possible including how long it has been operating and whether you have made any previous insurance claims. An insurer can refuse to pay out in the event of a claim if you didn’t answer questions accurately.

Several factors can affect the cost of public liability insurance including:

Business operation – For example, how long your business has been operating and how established it is, the level of turnover, and the location of the business.

Amount of cover – Most public liability policies will insure your business for £2m, but that can be increased to £10m or more depending on the insurer.

Specific factors and equipment – Depending on the nature of your business, factors such as whether your business has an ATM service, uses a deep fat fryer, has qualified staff or is located on an industrial unit can affect the price.

Previous claims and convictions – Insurers are risk adverse, so previous claims or if you’ve previously been declared bankrupt or entered into an IVA or CVA can increase the policy premium.

How to get public liability insurance

As with home, motor and travel insurance, it pays to shop around when looking for public liability insurance.
Insurers often have different appetites to risk, and specialist insurers may offer products better tailored to your type of business.

It’s a good idea to start checking prices using an insurance aggregator to get a broad view of the market. It’s also worth checking directly with your shortlisted insurers to see if you can get a better price by going direct.

Use a price comparison aggregator to get the best prices – Most of the larger insurance aggregators allow you to enter details such as your trade, type of business such as limited company or sole trader, and where your business operates. They use this to provide a range of quotes from a number of insurers, so you can quickly compare policies.

Use different comparison sites – Some insurance aggregator sites may only carry a limited number of insurance companies. It pays to get a quote through several comparison sites, so you get the widest possible range of public liability insurance quotes.

Go direct for comprehensive quotes – A few insurers, including , don’t use comparison sites. Be sure to contact major insurers who don’t appear in the comparison website’s results to see if buying direct can get a better quote. It’s also worth contacting any of the insurers that offered cheap insurance in the comparison results directly to see if you can drive the price even lower buying directly from their website. Insurers pay a fee to comparison sites, so buying direct may result in lower policy prices.

Don’t forget specialist insurers – Some organisations for specific business types, such as federations and unions may offer discounted public liability insurance buying direct through them. If your business is a member of a guild or federation check to see if they offer discounted public liability insurance.

How much public liability insurance do I need?

Most public liability insurance policies offer three levels of cover: £2m, £5m and £10m. For most small businesses £2m of cover will be adequate, but you’ll need to conduct a risk assessment of your business and the potential claims you could face. If you’re running an extreme sports business, for example, where the chance of major injury is higher, then you’ll need more cover.

The amount of cover you require may also be dictated by the industry you work in or by client requirements. For example, government or local authority contracts typically stipulate that a minimum level of public liability insurance of between £5 and £10m must be in place before you can be awarded work.

To help answer the question ‘how much public liability insurance do I need’, list all the ways your business could cause harm to a member of the public – from personal injury to damage to property. Make a rough estimate of the likely costs you could face, as well as legal time it might take to sort things out, and you should have a ballpark figure as to the amount of cover your business needs.

The types of cover provided by public liability insurance usually includes:

Legal expenses – This should cover the cost of hiring a solicitor and associated legal costs. Look for policies that include a free legal helpline and legal support. Dealing with compensation claims can be complicated and time consuming, so make sure your public liability insurance policy offers adequate cover.

Compensation costs – If a claim against your business is successful, the policy will pay out the amount the claimant was awarded from your business. Claims can include if a person was injured, their property was damaged, they became ill or died while on your premises.

Repair and medical costs – These are costs such as repairs to damaged property, such as items damaged when decorating a customers’ home, and medical costs if a customer was injured.

What public liability insurance doesn’t cover

It’s worth knowing that public liability insurance won’t cover accidents that happen to you or your staff, or damage to your property or business assets. As an employer, you are required by law have to employer’s liability insurance to cover staff claims. You also need general business insurance to cover damage, theft or other accidents to business assets such as laptops, vehicles, premises and plant equipment.


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Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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