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Any small business owner will naturally want to try to keep overheads as low as possible, so it is important to be able to prioritise your expenditure and understand which items really are important. It can be tempting to skimp on public liability insurance, particularly if you are not totally clear about what it is or whether it is of any real relevance to your business. However, failure to have proper cover in place can sometimes spell the end of your business if you find yourself having to defend a costly claim without insurance.
The main purpose of any public liability policy is to protect you against claims from third parties relating to damage to property or injury to people. In practice third party just means anyone outside yourself or your staff, whether it be a customer, visitor or just someone who is nothing to do with you or your customers. The kind of situation it is aimed at is any possible scenario where the work you are doing or have done is seen to cause injury to someone or damage to their property.
For instance, if you go onto other people’s property to carry out your work, it is quite possible that you might inadvertently cause damage to the property or something on it. This could be as simple as breaking or damaging an article on the property, or it could be something more complex such as causing a flood, which leads to extensive property damage. Alternatively, something might happen when a client or potential client visits you at your place of work. This can be the case even if you work from home. If they were to trip over something and break a valuable piece of IT kit it would be bad enough, but what if they fell and injured themselves? This is where it can start to get more complicated and more expensive.
Personal injury claims are the ones that can become particularly expensive, and people are very quick to file for this sort of action these days because many lawyers now actively encourage them to do so. Such cases can be quite complex and involve a lot of legal time, which quickly mounts up in terms of cost. Without public liability cover for such legal expenses many small business owners could be wiped out by such costs.
A common question asked is whether it is compulsory to have this type of policy in place. Unlike employers liability, which is compulsory for anyone who employs staff, there is no law that says you have to have public liability in place (apart from for a very small number who have to have it due to the nature of their business).
However, not being compulsory does not mean that you do not need it. It is not about being responsible, it is about good business sense. From a purely commercial point of view, is it better to plan for paying out a small and limited amount in order to protect yourself against claims which could potentially ruin your business, or does it make more sense to take a chance and hope for the best?
Given the nature of the things you are protecting against the costs of claims could very quickly become relatively huge, so the minimum level of cover for a small business would generally be a million pounds. That immediately sounds a lot, but that does not mean the premiums will be expensive. You can get good value cover by shopping around and the cost will be relative the size and nature of your business.
Like any form of insurance, your premiums will be worked out based on risk factors. The size of your business is one important factor. Larger businesses will pay more because they have much more work taking place and are therefore increasing the chances of accidents and claims taking place. So various factors will be used to work out your premiums. These can include your turnover, but other measures are sometimes used and this will vary depending on the insurer you approach. Generally speaking, though, the greater the volume of your business, the more you can expect to be paying.
As with anything else, you can save money by shopping around, so look for specialist companies online and approach a few for quotes before you make any decision. Always take care to look at the small print and make sure you are measuring them of a level playing field.