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Public Liability Insurance

In this short guide for employers and businesses, Richard Gorst, Director of Mitchell Charlesworth Insurance Solutions examines public liability insurance, who needs this kind of insurance and the limits of indemnity.

What is Public Liability Insurance?

Public Liability Insurance is insurance cover which will cover all sums you become legally liable to pay as damages and claimant costs and expenses arising out of accidental injury to any person (except employees - this is covered by Employers Liability Insurance), damage to material property, obstruction, trespass, nuisance, wrongful arrest or interference with any right of way, light, air or water resulting from the trade of business.

In the majority of cases, Public Liability Insurance (PLI) will cover damage that you cause to someone else's property or for injury to a member of public through your own negligence.

Who needs Public Liability Insurance?

It is not a compulsory legal insurance (unlike Employers Liability Insurance) but they are usually bought together along with Products Liability Insurance to form a Combined Liability insurance policy.

Subcontractors are often required to purchase Public Liability Insurance cover as a condition of their contract with their main contractor (principal) before you can work for them. The principal will usually set out the limits of cover you must purchase which will usually be identical to their own limits of cover. You will usually be asked to supply proof of cover by way of a "To Whom It May Concern" letter issued by the insurance broker.

Limits of Indemnity:

Most Public Liability Insurance policies nowadays will carry a minimum Limit of Indemnity of £2,000,000 any one occurrence although if you work for a local authority this will often be £5,000,000 or even higher. Contractors who work at airports usually are required to prove cover up to £25,000,000 hence specialist concessionaires' schemes are available. However, it is the potential to cause life long injury that will dictate the Limit of Indemnity you should choose, as this is where the costs can escalate significantly in the event of a tragic accident.

Covering all your business activities:

One of the most important things to get correct when arranging any type of commercial insurance is your business description and declaring all activities you make become involved in during the course of business. A bathroom fitter may occasionally install a new heating system. This is significantly more hazardous than his normal trade and if he has not declared this to the insurer then there is every likelihood he would not be indemnified in the event of a claim resulting from the installation of the heating system.

For further information, please contact a member of our Insurance Team to the right of this page.

Mitchell Charlesworth Insurance Solutions Ltd is registered in England and Wales no. 7002662 and is authorised and regulated by the Financial Conduct Authority.