Do I need public liability insurance for my business?

What is public liability insurance?

It’s designed for businesses that work around members of the public. This makes it handy for any tradesperson who owns their own business.

It’s also a form of cover that protects you against legal and financial action from former customers due to any mistakes or negligence on your part. It can help to pay for legal expenses and any compensation if you lose your court case.

Do you need it as a tradesperson?

Yes. Having this form of insurance means any errors you make that cause a member of the public to suffer are covered. It protects you against legal and financial action from former customers due to any mistakes or negligence on your part.

You won’t need to worry about expensive legal fees or compensation, preventing a small accident from drastically affecting your business.

Checkatrade members save 20% on specialist insurance with Covea

What if I’m self-employed?

Should an accident at work happen that injures someone or damages the property, could you cope with paying out a large sum of money? If your company couldn’t survive this, cover like this is a must-have and could save you and your business from financial ruin.

Think about how much insurance you need. Consider how risky your work is. This should help you decide on how much public liability insurance to sign up for.

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

What does it cover for a tradesperson?

Public liability insurance is one of the most important types of insurances for most businesses.

Here’s what it’ll cover:

• Your ladder accidentally falling 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.
• Poor quality work and negligence

How much does public liability insurance cost?

The truth is, the cost of Public Liability Insurance (PLI) will depend on a range of different factors.

Covéa Insurance report that the average Public Liability premium is £104. This factor in the average business having around 2 employees. And a £2 million limit of Public Liability.

Insurance is a key consideration for all new self-employed tradespeople. It definitely cannot be ignored.

When deciding how much to charge you for public liability insurance, an insurance company will look at the following variables:

• Size of your company: The larger your company and the more employees it has, the higher your premiums will be.
• Type of business you own: Different businesses need different levels of insurance cover.
• How much cover you need: If you’re working with valuable materials/tools or in expensive areas, your public liability insurance may cost more.
• Whether you have made insurance claims in the past: Insurers will look at your claim history. This gives them an idea of how likely you are to make another claim. Past claims can increase your premiums. But alternatively, a claim-free period prior to inception of cover can result in a no claims discount being applied.
• How risky your work is: If your work is particularly high risk, such as roofing, plumbing or groundworks, you’ll often need to pay more for public liability insurance.

Public liability insurance cost examples

As we mentioned above, the amount you pay for public liability insurance will vary depending on your circumstances and which insurer you choose.

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

Public liability insurance cost for small business

Smaller businesses generally take on smaller, less risky jobs. 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 public liability insurance. As a sole trader or partnership, this insurance is vital to protect your business.

Fortunately, the cost of public liability insurance isn’t too high. Depending on the trade you undertake, Checkatrade members can access cover from Covéa Insurance, starting at £35 including insurance premium tax (IPT).

Here’s a quick tip to save money on the insurance

As a Checkatrade member you’ll get exclusive access through Covea Insurance.

The unique “Insuratrade” is designed specifically for Checkatrade members. It offers the essential cover you need for a fair price. Join as a member today to find out more!

Is it essential to have P.L.I. as a self employed tradesman?

It’s not a legal requirement to have it, but it’s well worth having for your own peace of mind. It’s also 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 from the comfort of your own home. Or, if you’d prefer to speak to someone about your options, you can also call most providers. It’s well worth shopping around to find the best deals and using a comparison site can help you when making your decision.

Don’t forget though – as a Checkatrade member you have access to excellent public liability insurance cover through Covea Insurance.

Do I need public liability insurance by law?

You may be surprised to know that it’s not illegal. But, without this protection, you’re risking everything you’ve worked so hard to build.

In addition, while you don’t need cover by law, some contracts and clients may require you to have this in place. So you’ll be in breach of contract and at risk if you don’t have it.

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

Do I need public liability insurance as a sole trader?

Sole traders aren’t treated separately from their businesses in the eyes of the law. This means that if a past customer sues you for any work you’ve completed, you’ll need to make any payments out of your own pocket.

As a sole trader you are personally responsible for your business.

Sole traders do need cover for peace of mind and security.

To learn more about this topic, read a snippet of the free Accelerate! eBook here.

Or download – for free – the whole eBook here.

Do subcontractors need public liability insurance?

As a subcontractor, you’ll usually work under the main contractor to complete a job. The answer is that it depends. Often the main contractor will already have insurance in place that covers any work you do. As such, it’s always worth checking with the main contractor before paying out for your own 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. In this case, it’s worth getting your own insurance to protect for every eventuality.

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

Do I need insurance as a contractor?

If you plan to work at client sites or have an office that clients visit, you’ll need it to cover you for any injuries or damages that your work may cause. Also, some clients may require you to have cover before they agree to work with you.

Please note, hiring sub-contractors may mean you 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 by past clients in case of negligence, damages or poor workmanship causing injuries and accidents. This means, for security, you do need public liability insurance if you are self-employed.

Don’t forget that your business will be at risk if a customer starts legal proceedings against you. Plus, going through a court case is not only time consuming but a large payout could ruin your company and you may be personally liable.

Common questions

How much P.L.I. should I have?

This depends on the type of work you do, how risky it is, how often you work around the public and the complexity of your job.

Do individuals need it?

If you’re operating as a sole trader and come into contact with members of the public, having cover is important to protect your business.

What is this kind of insurance used for?

To cover your company financially and legally in case of accidents, negligence, poor quality work, damages, and injuries.

What is the difference between personal and public liability insurance?

Both are very similar with one key distinction:

• Personal liability insurance covers individuals.
• Public liability insurance covers businesses.

How can joining Checkatrade help my company?

If you’re concerned about the cost, joining Checkatrade means you can get insurance cheaper. All of our members get access to an exclusive insurance plan to suit them.

As a Checkatrade member, you’ll also have access to your own unique profile page where you can proudly display your insurance and accreditations. It’s the perfect way to show new customers that you’re willing to go the extra mile.

There are other exclusive benefits for our members too

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 – Saul Childs from Sunbury Flooring Services said this about us:

‘Checkatrade has provided me with a steady amount of enquiries from the day I joined. They were also a great support in relation to the pandemic’.

Starting a limited company?

If you’re looking at starting a limited company, we have a great resource for you. Our guide on setting up a limited company is bursting with tips and information to support your new career move.

Alternatively, if you’re in the process of starting a small business, our guide on setting up a new startup is an excellent source of knowledge to help you along your way.

Useful checklist

• Having public liability insurance can protect you and your business legally and financially.
• It covers everything from accidents, injuries, and damages you may cause.
• You’ll need to decide how much cover your company needs when signing up.
• Most tradespeople, from sub-contractors to sole traders will benefit from having it.
• It’s not a legal requirement, but it’s extremely useful to have.