While exact terms will vary from policy to policy, here we explain what is covered under public liability insurance generally—and what's usually not covered.
What does public liability insurance cover?
1. Compensation you have to pay for claims against your business made by third parties for:
- Bodily injury
- Property damage
- Personal injury (e.g. false arrest, detention, malicious prosecution or eviction of a third-party)
- Denial of access (e.g. trespass, nuisance, or interference)
Some higher-end policies also cover overseas personal liability claims. For example, Hiscox's public liability insurance protects partners, directors, employees or the spouse of such person from legal liability in case of bodily injury, property damage or personal injury incurred in a personal capacity whilst temporarily outside the UK, Channel Islands or Isle of Man.
2. Defence costs
Public liability insurance will pay the cost to investigate or defend a claim that is covered by the policy. This should include solicitor’s fees at any coroner’s inquest or fatal accident inquiry and summary court proceedings.
3. Court attendance
If you have to attend court as a witness in connection with a covered public liability claim, your insurer might pay compensation for the time spent in court at a solicitors request. The definition of 'you' might include partners, directors and senior managers.
- Bodily injury. You own a small retail shop. While restocking shelves an employee leaves a box in an aisle. A customer trips over the box and falls. He injures his wrist which prevents him from working and decides to sue you for damages. Your public liability policy will cover any legal costs and settlement claims up to your coverage limits.
- Property damage. You run a scaffolding business. While installing a scaffolding a brace falls, bounces and damages a car below.
Who is covered?
Public liability can cover claims brought against the business, owners, employees or even volunteer workers.
Who can make a claim?
Public liability covers claims brought by third parties, such as customers, clients, vendors, passersby, and other people not part of the business.
Note: Claims brought by employees are not covered by public liability—injury or illness claims brought by employees against a business would be covered by an employers' liability insurance policy.
How much is covered?
A public liability insurance policy will cover up to the limit of indemnity listed in your policy schedule. Public liability insurance is frequently written with a public liability limit between £1 million and £5 million of cover.
Your policy schedule will also specify whether the limit is on an 'each and every claim' basis or an 'aggregate' basis. ‘Each and every claim’ means that each individual claim has its own limit of indemnity. However, if several claims are related to the same cause, these are treated as one claim and the limit of indemnity applies to all of them in total. For example, if a platform collapses at a concert injuring 25 people, and you're required to pay each of them £100,000 as compensation, then the total liability is £2,500,000. A policy with a £1,000,000 limit of indemnity would not be sufficient to cover the claims because they all resulted from the same cause.
'Aggregate’ means that the limit applies to the sum all claims made against you during the policy year. For example, if third parties bring two separate claims against you for £750,000 in one period of insurance, these would not be covered by a £1,000,000 policy. But they would be covered by a £2,000,000 policy (because the claims sum to £1,500,000).
The limit of indemnity might include costs (e.g. defence costs) or these might be subject to an additional and separate limit (e.g. £50,000).
What does public liability insurance not cover?
Public liability insurance doesn't cover injury to employees, damage to your property, professional advice, deliberate acts, and more. Injury to employees would be covered by employers' liability insurance, which is required by law. Professional advice would be covered under a professional indemnity insurance policy.
- The excess
- Injury to an employee
- Damage to your property
- Product recalls (including repairing, removing, reconditioning or replacement)
- Professional advice
- Deliberate or reckless acts