What is Public Liability Insurance?

Public liability insurance is cover to protect you or your business in case you damage someone’s property or hurt someone through any negligent actions of your business. This is described in policy wordings as 3rd party property damage and 3rd party injury.

For example: You are working as a window cleaner. While cleaning a 2nd floor window, you accidentally drop something on a passerby injuring them. This is 3rd party injury. 

The 3rd party is someone who is not connected to the business. This could be a member of the public, or a customer.

So liability insurance will cover my business if property is damaged or people are hurt? Yes and no, there are several caveats to this. Although negligent actions in general are covered under a liability policy, there are a couple of situations where cover wouldn’t be applied.

Firstly, it is assumed you are competent at your trade, and as a result, cover will not extend to any item you are working on, or to any defective workmanship. This helps keep policy premiums down to manageable levels, but what does this actually mean? Imagine you are a cleaner working in someone else’s house. If you are cleaning a posh vase, but knock a picture onto the floor while doing this, then a claim could be made for the damage to the picture. However, if you damage the vase itself, no cover would apply, because that is the item being worked on at the time. For certain trades a policy will also specify conditions that have to be worked to, in order for any claim to be met. For instance: trades such as plumbers or heating engineers, who may use blow torches or other heat producing tools as part of their business, may have to work to conditions that specify certain fire precautions, for obvious reasons. Provided these are kept to, a claim is less likely to happen, and more likely to be paid if it does occur.

Secondly, it only covers actions that are negligent. Unfortunately, accidents do happen from time to time where no-one is at fault. In the event that an accident does happen, and the insured can show they took all reasonable and foreseeable precautions in their work, then it might be very difficult to prove they have been negligent in any way, and a liability claim would therefore be turned down. This does not mean the policyholder would be left high and dry, but that the insurance company would defend any legal action on behalf of the insured.

Of course having a liability insurance policy doesn’t give the insured carte blanche to be bloody stupid. As mentioned in the previous paragraph, a policyholder might not be held negligent for an incident if they had taken “all reasonable and foreseeable precautions”, and the majority of liability policies will have this phrase, or something similar incorporated into their wording. After all, any insurance policy is never a “catch all” device, and shouldn’t be treated as such. Despite this, Public Liability Insurance is still very worthwhile for a business to have, especially in today’s litigious climate where negligence claims can run to very large sums indeed.