Public liability cover explained without the policy wording

Aug 29
3 min read

Updated: 2 days ago

Introduction

Almost every trading business holds public liability cover. It is requested by customers, required by some contracts, and bought as a matter of course. Ask an owner what it would actually pay for and the answer is usually vague.

That vagueness matters in both directions. Businesses assume it covers things it does not — their own work, their own property, their own staff — and fail to claim for things it would have covered. The concept itself is straightforward once the policy language is set aside. Everything difficult about it is vocabulary rather than substance.

1. Public liability cover explained in one sentence

What it is for.

It responds when your business is legally liable for injuring somebody who is not an employee, or for damaging property that is not yours. That is the whole scope, and everything else is detail around it.

2. Know who counts as the public

Broader than customers.

Visitors to your premises, people affected by work you do elsewhere, passers-by, and other businesses' staff. Anybody who is not your employee and not you generally falls within it. That is a considerably wider group than most owners picture when they buy it.

3. Understand that it does not cover your employees

The most common gap.

Injury to staff is dealt with by employers liability cover, which is compulsory in many jurisdictions once you employ anybody. A business holding only public liability and employing people may have both a gap and a legal problem.

4. Recognise that it does not cover your own work

Where trades are caught out.

If workmanship is defective, the cost of putting the work right is generally not covered; damage caused by that defective work to something else may be. This distinction produces a great many declined claims and it is worth understanding before it arises. A plumber's faulty joint is not covered; the ceiling it destroyed usually is.

5. Choose the limit against realistic exposure

Not the cheapest available.

The figure required depends on where you work, what could be damaged and what customers demand. Working in occupied commercial premises or near expensive property justifies a higher limit than the minimum on offer.

6. Check what your customers require

Frequently the deciding factor.

Larger customers, landlords and public bodies commonly specify a minimum level and ask for evidence. Holding less than a contract requires is a breach in itself, separate from any claim.

7. Understand the exclusions that apply to your trade

Specific and important.

Work at height, hot work, work on certain types of property, and particular activities are commonly excluded or subject to conditions. A trade policy bought generically may exclude the thing you do most.

8. Notify the insurer early

A condition, not a courtesy.

Policies require prompt notification of any incident that might lead to a claim, and delay can prejudice cover. That applies to incidents, not only to claims, which means reporting before anybody has complained.

9. Do not admit liability at the scene

Instinct works against you here.

Apologising and accepting responsibility, however natural, can breach the policy conditions and compromise the insurer's position. Be helpful, record what happened, and let the insurer determine liability.

Keep evidence of the conditions at the time: photographs, a note of what happened, who was present and what was said. Claims frequently arrive months later, memories have gone, and the business that recorded the scene is in a completely different position from one relying on recollection.

Conclusion

Understand it as cover for injury to non-employees and damage to property that is not yours.

Recognise that employees are covered by a separate compulsory policy, know that defective workmanship itself is generally excluded, set the limit against your realistic exposure rather than the minimum, check what your customer contracts require, read the exclusions that apply specifically to your trade, notify the insurer of incidents promptly rather than waiting for a claim, avoid admitting liability at the scene, and record the circumstances while they are fresh.