Public Liability vs Property Owners' Insurance

As a landlord or property owner you have a responsibility to ensure your properties are insured, for the safety of your tenants, guests, or members of the public. You may have been told you need public liability insurance, but how does property owners’ insurance differ from public liability insurance, and how can you be sure you have the right covers in place?

In this article we will explore the difference between each policy and highlight how each provides cover, including easy comparisons and claims examples.

Tables of Contents

• What is public liability insurance?
• Am I legally required to have public liability insurance?"
• What is property owners’ insurance?
• What is property owners’ liability insurance?
• What is the difference between property owners’ liability insurance and public liability insurance?
• Am I legally required to have property owners’ insurance?
• Can I just buy public liability for my property business?

What is public liability insurance?

Public Liability insurance protects the policyholder against claims that their business activities or presence have caused injury to or damaged the property of members of the public or other third parties. If someone gets hurt because of something you are doing as a business then they may be able to claim against your public liability policy.

Example

You try to throw a nearly empty can of paint into the skip in front of the property you are working on, but the can bounces off the skip edge and onto a parked car, denting it and spilling paint all over it. The owner sues for the damage and is paid out from your public liability insurance.

A visitor to your office slips on a newly mopped floor and damages their knee. They claim against you for their loss of income and the permanent damage sustained to their knee.

Am I legally required to have public liability insurance?

No, you are not typically required to hold public liability insurance by law. You may be required to hold it by contract with your clients or suppliers, and if you don’t have it you can still be held liable for injury or illness caused by your presence or business activities. You would then have to obtain your own legal representation and potentially have to pay the costs of any claims against you from your own business.

What is property owners’ insurance?

Property Owners’ insurance is a package of covers including property owners’ liability, buildings insurance, and a range of optional extras such as loss of rent, employers’ liability , contents insurance, replacement keys, malicious damage by tenants, unoccupied cover, and legal cover.

Note that some policies include more or less of the above options as standard, and some optional extras may not be available for all kinds of property or tenant (commercial vs. domestic and commercial tenant activities all have an impact).

What is property owners’ liability insurance?

Property owners’ liability insurance protects property owners from claims that members of the public or other third parties have been injured as a result of their working, visiting, or living in or on the property covered by the policy. It also covers damage to the belongings of anyone working, visiting, or living in your property.

Example

A roof tile falls from your residential property and damages a visitor’s car. They claim against your property owners’ public liability insurance and the cost of repairing the car is covered by the policy.

A step in your property breaks and your tenant falls down the stairs, injuring themselves. They claim against your property owners’ public liability policy since the injury was caused by the state of repair of the building.

What is the difference between property owners’ liability insurance and public liability insurance?

Although they both cover the same kind of injuries and property damage, the key difference is that public liability is provided in the name of a business and can cover that business and its employees wherever they go and in their office, whereas property owners’ liability insurance is tied to a location and a specific structure, so will only cover injuries or property damage caused by that location or structure.

Note, it's likely that neither is suitable for covering individual liability (e.g. injuring someone as a result of an activity you do, outside of business) as we discuss here.

Example

A tradesman visits your office, which you rent from a commercial lettings company. Whist visiting, he leans against a ground floor window, which pops out of the frame. The tradesman suffers from a neck injury and is unable to work. Despite the purpose of his visit being to your business and the injury being sustained on your business premises, the claim is handled by the commercial lettings company’s property owners’ liability insurance as the injury was caused by the state of repair of the building owned by them.

Am I legally required to have property owners’ insurance?

You are not legally required to have property owners insurance, although it is a condition of many buy to let mortgages so read your obligations carefully. Even if you outright own the property you are letting, property owners’ insurance can cost as little as £150 annually but can save you millions of pounds in the event of a large injury claim.

Can I just buy public liability for my property business?

No, you can’t use a business public liability insurance to cover a property that you own. If you are a landlord who also has an office, employees, and subcontractors you are likely to require both ‘standard’ public liability and a separate property owners’ insurance policy. This is to ensure that you are covering injuries and damage caused by your employees and business activities (public liability) and from any properties you may own (property owners’ public liability).