Do you need public liability insurance?

If you’re setting up a limited company or setting up a new startup, you’ll want to know more about public liability insurance. So let’s explore what it is and whether it’s needed for a trade business.

What is public liability insurance?

Public liability insurance (PLI) is designed to protect businesses that work around members of the public or customers. Basically, anyone who isn’t an employee. This makes it handy for any tradesperson who owns their own business.

Should a member of the public or a customer make a claim against you, this cover could pay the legal or compensation costs, depending on the specifics of your cover.

Specifically, the cover is intended to protect against claims from members of the public. That could be of property damage and accidental bodily injury, disease, illness or even death caused by you or your business.

Regardless of how small any previous mistakes or negligence has been on your part, your business may benefit from insurance.

So do you need public liability insurance?

Probably. Having this form of insurance means you’re protected against mistakes you make that affect a member of the public.

Especially because PLI can protect you against legal and financial action filed by former customers.

And getting public liability insurance can help to pay for legal expenses and any compensation if you lose your court case.

This prevents a small accident from drastically affecting your business. It is why we make it essential for all Checkatrade members.

Do you need public liability insurance if you’re self-employed?

Even if you’re self-employed, you’ll need the correct insurance.

Think about it this way. If an accident happens at work that injures someone or damages the property, could you afford to pay out for it?

If your company couldn’t survive this, this cover is probably a must-have. It could even save you or your business from financial ruin!

So, think about how much insurance you need. And consider how risky your work is. This should help you decide how much PLI to take out.

For guidance, most policies will cover you for between £1 million and £10 million.

What does public liability insurance cover for a tradesperson?

PLI is one of the most important types of insurance for most businesses.

It is crucial for all new, self-employed tradespeople. It’s so important tradespeople get the right insurance to protect their company.

Some examples of what public liability insurance covers:

• If your ladder accidentally falls on a homeowner, pedestrian or contractor
• If you accidentally cause damage to someone’s property when doing work. For example, spilling paint on a carpet or knocking over a vase

How much does public liability insurance cost?

The cost of PLI will depend on a range of different factors.

Cover can vary from insurance provider to insurance provider. Estimates online indicate that in 2024 that the average cost of PLI for businesses is £118.

This is based on the average business having around 2 employees. And a £2 million limit of Public Liability.

However, be aware that Checkatrade members can get PLI for less. You could save up to 20%* with us. Log in to our Member’s Area and take a look at the latest deals from our partners.

How do insurers decide how much to charge?

When you inquire about different types of insurance, the insurance company will decide how much to charge you based on a number of factors.

Public liability insurance costs are based on factors including the following:

The size of your company

The larger your company and the more employees it has, the more complex it’s likely to be. This could affect the premium you might pay.

The type of business you own

Insurance shouldn’t be one size fits all, so different businesses need different levels of insurance coverage.

How much cover you need

If you’re working with valuable materials and tools, or in expensive areas, your PLI might cost more.

Whether you’ve made insurance claims in the past

Insurers will consider your claim history. Evidence of past claims could be a factor in how much premium you pay for cover.

On the other hand, a claim-free period before the inception of cover may result in insurers deeming you to have a low risk profile.

How risky your work is

If the work you carry out is considered a higher risk, such as roofing, plumbing or groundwork for example, this will be likely be taken into consideration when calculating your premium

Public liability insurance cost examples

As we mentioned above, the amount you pay for PLI will vary. It all depends on your circumstances and the insurer you choose.

The below table from the NimbleFins website covers the average UK prices for different levels of insurance:

(Sourced from comparison site NimbleFins in March 2024)

Public liability insurance cost for small business

Smaller businesses will likely take on a range of different jobs. And this can impact the cost of insurance.

Public liability insurance cost for a sole trader or partnership

Limited companies aren’t the only businesses that need insurance.

As a sole trader or partnership, this insurance is vital to protect your business.

Depending on the trade you undertake, Checkatrade members can access cover from our insurance partners. Have a look at our Member’s Area to see what you could save.

Is it essential to have public liability insurance as a self-employed tradesman?

It’s not a legal requirement to have it, but it’s well worth having for protection and peace of mind. Also, it’s required by many trade associations.

If you work on commercial sites, you’ll likely need to provide proof you have it, too.

How to get the ball rolling

Many insurance providers have websites where you can easily sign up.

Or, if you’d prefer to speak to someone about your options, you can also call most providers.

It’s worth shopping around to find the best deals, and using a comparison site can help you when making your decision.

Do I need public liability insurance by law?

Surprisingly, no. It’s not a legal requirement to have public liability insurance. But, without this protection, you may be more at risk of suffering a claim you can’t pay.

And while you don’t need cover by law, some contracts and clients may require you to have this in place.

So you’ll likely be in breach of contract if you don’t have it.

Deciding to sign up for PLI is a choice you’ll need to make yourself, based on your circumstances.

Do I need public liability insurance as a sole trader?

Probably, as sole traders need cover for peace of mind and security.

Sole traders aren’t treated separately from their businesses in the eyes of the law. And as a sole trader, you’re personally responsible for your business.

So, if a past customer sues you for any work you’ve completed, the payments will come out of your pocket.

Do subcontractors need public liability insurance?

It depends. As a subcontractor, you’ll usually work under the main contractor to complete a job.

Usually, the main contractor already has insurance that covers any work you do.

So, it’s always worth checking with the main contractor before paying out for your insurance policy.

• Not all insurance policies are the same
• If you’re covered under the main contractor’s policy, this may not cover every risk you encounter
• It’s worth checking to ensure you’re adequately covered

In addition, check your contract carefully as you may be required to arrange cover before starting work.

Do I need insurance as a contractor?

Plan to work at client sites or have an office that clients visit? Then you may need it to cover any injuries or damages that your work may cause.

Also, some clients may require you to have insurance before they agree to work with you.

And when hiring subcontractors, you’ll likely need to cover them in case of accidents or damages.

Do I need insurance if I’m self-employed?

Self-employed tradespeople are at risk of being sued. This is because they can be sued by past clients for negligence, damages, or injuries and accidents caused by poor workmanship.

So, for security, you might need public liability insurance if you’re self-employed.

Don’t forget that your business may be at risk if a customer starts legal proceedings against you.

Plus, going through a court case is time-consuming. And a large payout could be damaging to your company if you’re personally liable.

Public liability insurance FAQs

How much public liability insurance should I have?

There’s no straight answer. It depends on the following:

• The type of work you do
• How risky it is
• How often you work around the public
• The complexity of your job

Do individuals need public liability insurance?

If you’re a sole trader who comes into contact with the public, it’s important to ensure you’re covered in the event of injury or damage to third parties.

How can joining Checkatrade help my company?

Worried about the cost of taking out insurance? Just join Checkatrade to enjoy our member benefits, including money off the cost of PLI.*

As a Checkatrade member, you’ll also have access to a unique profile page. Here, you can display your insurance and accreditations.

This is the perfect way to show new customers that you’re willing to go the extra mile.

Other exclusive Checkatrade benefits

Member discounts, flexible membership options, and a profile to show you’re a quality tradesperson.

You can customise your membership based on the amount of support you need.

Don’t just take our word for how good Checkatrade is, read one of our customer reviews.

Colin Jones from C Jones Home Improvements said:

“Since starting with Checkatrade at the beginning of my business, most of my work has been generated through the site. So I’m very pleased with the service and coverage.”

Useful public liability insurance checklist

• Having insurance can protect you and your business legally and financially
• It can cover accidents, injuries, and damages to members of the public and their property that your business causes
• You’ll need to decide how much cover your company needs when signing up
• Most tradespeople, from subcontractors to sole traders will benefit from having it
• It’s not a legal requirement, but it’s extremely useful to have

Content disclaimer: This content has been created for general information purposes and should not be taken as formal advice. Where reference to insurance is made it is for educational purposes and doesn’t constitute financial, legal or professional advice – always speak to a professional advisor if you need advice. Read our full disclaimer here.

*As you’d expect, terms and conditions apply. Enro Ltd t/a Superscript is authorised and regulated by the Financial Conduct Authority.