Public liability insurance: what do you need to know

Although it isn’t legally required, public liability insurance is a very important piece of insurance for businesses.

Whatever trade you’re in, public liability insurance is an important method of protecting both yourself and your business. If you’re looking for such protection, here are a few things you should know about this type of insurance.

What is it?

Public liability insurance, or third party liability cover as it may also be known, is a policy that serves to protect both you and your business from any lawsuits where you owe damages. The policies, like any insurance option, can vary, but generally offer to give you some protection from any third party lawsuits, where your negligence or responsibility was to blame.

This does not cover yourself. Public liability insurance serves to protect you from exterior lawsuits; it is not any form of health insurance and does not offer protection if you yourself are injured. It is also not income protection insurance; whilst it looks to help with legal expenses, it is not insuring your actual job or ability to work.

Who is it for?

Due to the nature of public liability insurance, it is typically used in the trade business. Due to the nature of their work, and the risk of public accidents, such an insurance policy is recommended. Whilst it is not legally required, it is none the less advised for any successful tradesman.

Main contractors, for example, may favour sub-contractors who provide such public liability insurance for themselves. Many main contractors also have it in their own insurance policies that all further sub-contracted tradesmen have public liability insurance.

This is simple financial sense; any company you work for wants the best outcome in a lawsuit operation. If you don’t have liability insurance, it creates a greater risk. Naturally, this is often unwanted by the main contractor, which is why so many only seek tradesmen with adequate insurance.

But public liability insurance isn’t just for people who work on building sites or have dangerous professions. If you run a business, you should have public indemnity insurance if you have staff working onsite, or even if you regularly meet with clients at your place of work. Why? If an accident happens while they are on your premises, you could be liable. It pays to protect yourself.


An important aspect of public liability insurance, indemnity refers to the amount that will be payed by the insurance provider in the event of a claim. Different policies have different amounts, but policies often start with £1 million and can reach £5 million or higher. The amount needed will be based on your individual work. Less risky trades, where there is a reduced risk of severe accidents or incidents occurring, will naturally have less.

Furthermore, your various employers may also seek specific indemnity amounts. Main contractors may ask sub-contractors to have a set minimum liability cover, to make sure that all tradesmen on site are suitably insured against the risks of the project. Likewise, local councils or authorities may ask for the full £5 million indemnity.