Public liability insurance is more than just protection for your business – it is also an investment in the future. Having the right cover could secure you better clients and keep your business going in the event that things go wrong.
Public liability insurance should be a top priority for most business types. If clients, customers or members of the public come to your place of work, or if you go to theirs, you should have this cover on your business insurance policy.
What is public liability insurance?
Public liability insurance covers your business against claims arising from injury or damage caused to a person or their property as a result of your work. Claims of this sort can be hugely expensive; medical bills, legal fees and other miscellaneous expenses arising from the simplest of incidents can run to many thousands of pounds. Indeed, for smaller uninsured businesses a single incident could spell bankruptcy.
Most businesses are not legally obliged to take out public liability insurance. However, if you fail to get the right cover, you risk the financial security of your firm. Furthermore, many potential clients will refuse to do business with you unless you can demonstrate that you are sufficiently well insured.
A worryingly large number of businesses are yet to take out public liability insurance. But in 2009 we saw abundant evidence of the importance of this business investment.
Public sector work
The public sector has become an increasingly important source of revenue for many firms. As the recession began to bite, the government promised to increase the amount it spends with small and medium sized businesses (SMEs), particularly on so-called ‘lower value contracts’ – those worth £100,000 or less.
This increase in public sector spending has been hugely beneficial to a large number of firms. But amongst its criteria for taking on suppliers, the government stresses that it will only deal with companies that have sufficient public liability insurance. Furthermore, the minimum level of cover required for public sector work is generally higher than that demanded by private businesses – up to £10 million in many cases. As such, many firms have lost out on lucrative contracts because they are under-insured.
If you wish to tap into this lucrative new revenue stream, you must ensure that you have suitable public liability insurance.
Increased risk of litigation
Last year also saw the continuation of an important trend – the increased prevalence of ‘no win no fee’ lawyers. These professionals take on a case on the understanding that they will only be paid in the event of a successful outcome for the complainant. The popularity of no win no fee arrangements has meant that a vastly increased number of individuals now have access to the judicial system. While this is largely a good thing, it has meant that companies are now at greater risk of expensive litigation.
A lawsuit can come from as simple a mistake as a trailing cable, and it could be potentially ruinous for your business. There were several cases last year in which self employed contractors bore the brunt of hefty injury claims because of work they had carried out on a client’s premises. Many self employed individuals do not consider the importance of public liability insurance; it is often seen as the preserve of corporations. But if you come into contact with, or your work directly affects clients or members of the public it is vital that you are properly insured.
Unemployment and start-up numbers
UK business is underinsured to a startling degree. A vast number of firms have no insurance at all, and many of those that do are insufficiently covered. But this sorry state of affairs has become more prevalent in the past year, as an increasing number of people turn to self employment in the face of the recession. Many of these individuals have begun contracting or consulting - jobs that frequently require work on clients’ premises.
Many other newly self employed individuals have chosen to open retail or service businesses. These firms, with customer-facing elements, are in a particularly risky position when it comes to public liability claims. Just last week a bakery was on the receiving end of a major compensation claim after a customer found a stray oven glove in their loaf of bread. While this is an extreme case, the principle is important for all firms; a single, simple slip-up can place an uninsured business at severe financial risk.
Public liability insurance should be one of your top priorities as a business owner, as part of a full business insurance policy. Do not let the lack of legal obligation fool you; this is an important investment that can help protect your firm from hugely expensive compensation pay-outs. If your work affects clients or members of the public, it is vital that you make sure you are correctly covered as soon as possible.