Everything You Need to Know About Public Liability Insurance

Owning any kind of business brings all sorts of risks. Public liability insurance has the purpose of minimising those risks and therefore should be taken into consideration.

What is Public Liability Insurance?

Public liability insurance is an insurance cover that has as the main goal to protect a business from financial costs of claims made by members of the public. The claim can be made by a third party in case they get injured or have their property damaged as a result of your business operations. For instance, if someone gets injured in your shop by tripping over some of your equipment, they have the right to make a claim against your insurance. This is where PLI comes in and covers the legal costs created by this claim against you. If you happen to not have it, you would have to cover the costs yourself. The policy this insurance uses is very common in Australia and the UK, while in the USA businesses tend to use commercial general liability insurance instead.

Do I Need Public Liability Insurance?

You are in no way obligated by any law to have public liability insurance; however, it can be quite useful to have it. PLI can provide you with protection that will save you a lot of money in the long run. Accidents happen and it is not uncommon for members of the public to make claims against any business. This policy is very beneficial for any business. If someone was to make a claim against you because they were somehow damaged by your company, you could possibly end up facing costs up to tens of thousands of dollars or even more. Not having PLI can also put you at risk of losing some clients and bigger contractors who will ask you to see the proof of insurance before they agree to work with you.

What Does Public Liability Insurance Cover?

Public liability insurance, as mentioned above, covers the costs of potential claims against you made by the public. Its goal is to defend your business during a lawsuit process. So, the most common question, among many others, is 'What does PLI cover exactly?' First of all, it covers any type of bodily injury. In this case, PLI minimises the risk of someone getting injured on the property of your business. This usually includes areas outside the property as well such as parking lots. Secondly, property damage coverage protects the business from causing damage to someone else's property. For instance, if a carpenter is working in a customer's home and happens to break a window, the cost of that damage will be covered by PLI. Lastly, this policy will also cover all the legal expenses you will need in a lawsuit.

What happens if you don’t have it?

There are a lot of different responsibilities that business owners have to take care of, which is why managing the PLI tends to be neglected. However, if an accident occurs on your business property and you’re not covered by insurance, you end up in a messy situation. In case someone makes a claim against you and you don’t have PLI, you will have to find a good solicitor to gather evidence and prepare an adequate defence. It might seem like an insignificant inconvenience, but it can easily turn into a much bigger problem that could potentially ruin your business. If you are not covered by insurance you will not only have to pay for costs associated with the claimant's injuries, but you will also have to cover the cost of court fees, medical expenses, and legal costs to everyone who is involved. On rare occasions can you claim back your losses if the claim is unsuccessful, but it is not guaranteed whether you will get them all.

How much is Public Liability Insurance?

The amount of money that goes into public liability insurance can differ. It depends on the level of cover you need and the type of business you're in as well. If the risks of potential damage are higher, it will naturally require more cover. For instance, trades that rely on working with water, heat, and height pose more risks and therefore need more cover. In other words, most insurers will base the amount of cover on the type of business you own and your general turnover too. This will help them estimate how active your business actually is.

How to Make a Claim on Your Public Liability Insurance?

Understanding the process of making a claim is also very important. Firstly, if an accident occurs, make sure to keep all records of what has happened. Even keeping photographs is a good idea because it can provide you with visual evidence. The next thing you can do is make sure the damage caused by the situation is minimised as much as possible. In case a customer is injured call the ambulance and help them out. Your insurance company will provide you with the individual guidance on what you should do and will also get you well-informed about the public liability compensation that will most likely be required. You have to understand all the terms and conditions of the policy. Otherwise, you might end up invalidating your policy or even have your claim rejected.

How much Public Liability Insurance Cover Do You Need?

Lastly, the level of PLI cover that you need solely depends on the risk that is associated with your business. But it can also depend on what the clients expect from you and your labour. Some larger companies might even expect you to have insurance cover up to a certain amount or else they wouldn’t even consider working with you. Thus, not having insurance will probably lead to missing some of the great and important work opportunities. Insurance that the companies tend to offer usually starts at about a minimum of $1 million and can increase up to $10 million. These costs might be high, but compared to what costs you might have to deal with when faced with a serious legal claim; getting PLI definitely seems like a better option.

Conclusion

All things considered, getting PLI can be very beneficial for your business because it will get you out of the messy situations and help you save a lot of money in the long run.