Public Liability Insurance is needed by any business that works around members of the public. This insurance isn’t just for certain tradespeople, it covers everyone in the trade sector from plumbers to roofers, to electricians.
The purpose of Public Liability Insurance is to protect you and your business from any financial and legal action from customers due to any mistakes or negligence on your behalf. The insurance can cover any expenditure from legal expenses to paying out compensation. Typically the insurance will only cover you up to a certain amount so it is essential to have a suitable level of cover for the type of work you do.
Most businesses tend to cover themselves between £1 million to £10 million. Generally, Public Liability Insurance is not very costly for how useful it can be for your business. If your business did happen to make a mistake and were told to pay a large sum of money, how would your business cope?
If you are in the construction industry then it is almost certain that you will need Public Liability Insurance. If you are working with customers at their homes or businesses or areas accessible by the public then this insurance is a most.
Public Liability Insurance will cover any accidents, negligence, damages, injuries caused by your work or just poor work in general so anything that is work related, Public Liability Insurance can help protect you and could potentially save your business.
The are many factors that can have an impact on the cost of Public Liability Insurance and the first one is the industry. The construction industry can have one of the highest injuries occurences of all industries and because of this, the cost of the insurance is above average.
The average cost for Public Liability Insurance on a £2 million coverage for a builder is £82 per year if they are self-employed or the only director. If there are a 2 director business it jumps to £456 per year and if they are a partnership it is £89 per year. The average cost for a construction business is £226 per year.
The average across all industries is only £118, which means it is more than double.
In 2021, the average public liability claim is £13,500 which makes the investment of on average £226 per year a significant saving in the long run if the worst does happen. If we took the average claim and the average cost, you could be paying for nearly 60 years and one average claim on the insurance will have covered your investment.
Public Liability Insurance is not a legal requirement, it is a business decision you will need to make based on your business circumstances. You are still allowed to work without the insurance however you will be putting your business on the line in order to save roughly £200 a year.
Depending on the clients you work with such as large contractors or projects you may be required to have Public Liability Insurance in place. Even some domestic clients will make sure they are working with a company that has the appropriate insurance in place.
Sole Trader or as self-employed are still just at risk of getting sued compared to any other business. If you do happen to get sued for your old work, negligence or workplace injuries you will need to make any payments out of your own pocket and you won’t have the support of using an insurance company once it has happened. As such, as a sole trader you do need public liability insurance for peace of mind and security.
It’s important not to forget that failing to sign up for public liability insurance might save you money in the short run but if the worst happens, you could be held personally liable for the compensation.
Usually as a subcontractor you will work under the main contractors insurance however sometimes the policy of the contractors insurance will not cover you for everything like it would do if you had your own. This would be something you would have to find out from the contractor themselves.
We would always recommend having your own Public Liability Insurance in place anyways.
If you will be working on sites with the general public, you should have public liability insurance to cover you for any mistakes, negligence or workplace injuries that could happen. As a contractor, your clients may require you have Public Liability Insurance in place already before work can begin.
If you are hiring subcontractors you should make sure your policy covers them work under your company and if anything does happen you are also insured as this can be a bit of a minefield.
Professional Indemnity and Public Liability Insurances are both designed to add a layer of protection to your business whilst both quite similar to each other, Professional Indemnity Insurance covers the same elements as Public Insurance however it includes bad advice or issues with your work that affects your clients.
Public Liability Insurance also covers the general public from your workplace in the chance of any injuries or negligence.
Both insurances are not required by law however they both protect your business from any legal or financial complications which we highly recommend you have both in place.
If you need any help with insurances feel free to reach out to us at Saint Financial Group, the No.1 UK construction support company.
This article was written for Saint Financial Group, a multidisciplinary group based in the UK that helps construction businesses develop and grow. SaintFG offers a range of quality solutions in supporting businesses.
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