How much does public liability insurance cost?

Public liability insurance is not a legal requirement but it is an important protection your business should have in place, especially if you deal with the public in your activities. So, how much does public liability insurance cost? If you’re considering taking out a policy, read the following sections to find out what to expect:

• What is public liability insurance?
• How much does public liability cost?
• How can I get public liability insurance?

Public liability insurance is a policy that insures your business against any claims made if a member of the public is hurt or harmed whilst dealing with your business. This could be while they were on your premises, at an event with your company or from using your products. This usually covers legal fees you incur as well as compensation for the person involved.

Businesses are not legally required to have public liability insurance. However, if your business deals with the public then it would be a smart business decision to invest in a policy. For example, if a customer tripped over equipment when visiting your place of work, they would have a valid claim. It’s important to be protected as compensation can be in the tens of thousands and this could be catastrophic to a new or small business.

How much public liability insurance costs really depends on the nature of your business. In short, it’s a fairly small cost, so it is worth covering yourself with a policy. It has been found that the average public liability insurance policy is around £120 annually. For startups or smaller businesses that have little involvement with customers in person, this may even go as low as £40, but expect to pay somewhere in the middle of this from a standard insurer (around £70-£80 annually). 

Depending on the nature of your business policy, prices may be higher than this average. Risk factors such as the size of your business, how often your company interacts with the public and what machinery you operate on-site can ramp up the cost of a policy.

For example, a takeaway restaurant will pay a higher premium because there is a chance that a customer or contractor could slip on freshly cleaned floors, suffer burns, or contract food poisoning from the business. The same could be said of a hairdressing salon, where there is lots of equipment, trip hazards such as electrical plugs and wires, and maybe even wet floors due to cleaning. Businesses with risks to the public like these can expect to pay much more than a business that doesn’t interact with customers constantly in their daily operations.

When you apply for a quote, you must be fully honest in answering the questions or you risk having the policy be null and void if you ever have to claim on it. 

Here are some of the factors you may be faced with when calculating how much your public liability insurance will cost and how much you will be covered for:

• Operations: how long you’ve operated for, your workplace and what your turnover is.
• Level of cover: depending on the risks your business faces, you can select cover for three levels, usually £2 million, £5 million or £10 million. Sometimes a contract (such as a project you are working on or an event you want to attend) will state how much cover you should have before you can work with them, so always check any small print.
• Equipment: the tools and equipment you use to run your business can affect the cost of a policy. Using the takeaway example, having a deep fat fryer on-site may increase the price as there is more risk to staff and the public with this equipment there.
• Previous claims: as with any insurance policy, like for a car or home, if you have made previous claims then you must be upfront about it. This will likely make the policy more expensive for you but if you do not disclose it then the insurer could refuse to pay out if needed.

As with personal insurances, it can pay to shop around for business insurance too. Here are some tips to follow when finding and applying for public liability insurance:

• Using comparison websites can help you get the best prices and compare different policies so you can get one that best fits your business needs.
• Use different comparison websites (not just one) as some may have offers or collaborations with certain insurers and you may find a better deal.
• Some insurers are not featured on comparison websites. If you do your research to find some reputable insurance companies and you can’t find their details on a comparison site, then go to them directly for a quote. It won’t cost you anything and you might find a better policy for your needs.
• Research specialist insurers. Some insurance firms may specialise in public liability insurance for your industry. They will have detailed knowledge of the risks that your type of business has, and will be able to accommodate your business needs in a policy that isn’t generic. 
• If your business is part of a union or federation, you may also find that you can get discounts with certain insurers through your membership. 

Now you’ve found out more about public liability insurance and the vital role it could play in protecting your business, if you’re unsure about any specific terms, check out our other blog on insurance, where you’ll find lots of helpful information.  

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