PUBLIC LIABILITY INSURANCE:
DEFINITION, COVERAGE, BENEFITS, COST, CLAIMS

Public liability insurance protects businesses from claims for compensation due to injury to a member of the public or damage to their property, resulting from the business's activities. Its primary purpose is to cover the costs of such claims, including compensation payouts, legal fees, and repair or replacement of damaged property, thus safeguarding the business from unforeseen and potentially ruinous financial liabilities.
What it Covers:

Personal Injury: If a customer or member of the public is accidentally injured at your business premises or due to your business's operations, this policy can cover their medical costs and other related expenses.
Property Damage: It also covers claims where a third party's property is damaged as a result of your business activities, such as accidentally spilling coffee on a client's laptop.
Legal Costs: In addition to compensation, the policy can cover the associated legal fees and defense costs incurred in handling a claim or lawsuit.

Primary Purpose:

Financial Protection: The main goal is to provide financial protection against claims and legal actions from third parties, preventing unexpected expenses from causing severe financial strain or even business closure.
Business Viability: By covering these potential liabilities, the insurance helps ensure the business's continuity and stability, even if an accident occurs.
Meeting Requirements: While not legally mandatory in all regions, public liability insurance is often a condition of employment or a requirement for obtaining business opportunities from clients, governments, and other organizations.

Who typically needs to purchase public liability insurance?

Businesses that regularly interact with the public or work on public or client premises are the primary purchasers of public liability insurance. This includes businesses with customers visiting their shop, restaurant, or office, businesses operating in public spaces like builders, and businesses whose employees work at client sites.

Who typically needs it?

Businesses with customer-facing premises: Shops, restaurants, salons, and any business where the public visits.
Tradespeople and contractors: Builders, plumbers, or other tradespeople working at client homes or public locations.
Businesses operating in public areas: Work that could cause injury or damage to the public, even if it's just being in a public space.
Businesses with off-site events: Any event like a concert, promotion, or exhibition where the public is in attendance.
Businesses that visit clients at their location: Any profession where staff regularly visit a client's workplace.
Property owners and managers: Companies managing buildings, who can be held responsible for incidents on their property.

Why is it needed?

Accidents: Covers costs if a member of the public is injured on your premises or as a result of your work.
Property damage: Protects against claims if your business causes damage to someone else's property.
Legal costs: Covers your expenses for defending a lawsuit, even if your business is not found liable.
Business reputation: Helps safeguard your company's image and financial stability.

When to consider it: You frequently interact with the public, Your business operates in public spaces, You perform work on client property, You organize public events, and A client or a trade association requires it.

What types of incidents are covered under public liability insurance?

Public liability insurance covers incidents where your negligence causes death, personal injury, or property damage to a third party (like a customer, contractor, or member of the public) during your business activities. It provides financial protection for the associated costs, including compensation payouts and legal defense fees.

What is Covered?

Personal Injury: Covers claims for bodily injury or death that a member of the public suffers due to your business's actions or negligence.
Property Damage: Covers damage to a third party's property that occurs as a result of your business operations or activities.
Legal Costs: Covers the significant costs of defending your business against a liability claim, regardless of whether the claim is successful.

Examples of Incidents Covered

On-site incidents: A customer slips and falls on a wet floor at your business premises.
Off-site incidents: A contractor working at a client's location accidentally damages their property, or a member of the public is injured by equipment you are using in a public space.
Negligence: Faulty workmanship by your business leads to property damage, or an error in your business activities causes injury to a member of the public.
Failure to act: Failing to take necessary precautions or turning off equipment, which later causes damage or injury.

What are some common exclusions in public liability insurance policies?

Common exclusions in public liability insurance include employee injuries, professional advice, faulty workmanship, pollution, damage to property being worked on, and intentional/reckless acts. Coverage for these risks is often provided by other specialized policies, such as workers' compensation insurance, professional indemnity insurance, and employers' liability insurance.

Specific Exclusions

Employee Injuries: Injuries to your employees resulting from their work are typically excluded, as this is covered under mandatory workers' compensation or employers' liability insurance.
Professional Advice: Liability arising from professional advice or services is usually excluded, as this falls under professional indemnity insurance.
Faulty Workmanship: Claims for damage caused by your own faulty materials, products, design, or workmanship are often excluded.
Pollution: The cost of air, water, or ground pollution and its cleanup is typically excluded, although some policies may cover sudden and unintended pollution events.
Damage to Property Being Worked On: Many policies exclude damage to a customer's property that your business is working on, although some specialist policies offer this coverage.
Intentional or Reckless Acts: Insurance policies generally do not cover claims resulting from intentional, reckless, or criminal acts.
Products: Liability for products manufactured or supplied by your business may be excluded and require separate product liability insurance.
Contractual Liability: Liability arising from breaches of contract is often excluded.
Asbestos and Mould: Claims related to asbestos and gradual deterioration like mould and rot are frequently excluded.

Why These Exclusions Exist

Specialized Cover: Some exclusions are in place because these risks are better covered by other, more specific types of insurance.
High Costs: Product recalls, for example, can be extremely expensive and require separate policies due to the high costs involved.
Policy Scope: Public liability insurance is designed to cover incidents involving members of the public or their property in public places, not the internal workings of a business or the direct consequences of a business's own faulty products or advice.

Are subcontractors automatically covered under my public liability insurance policy?

No, subcontractors are NOT automatically covered by your public liability insurance policy; whether they are covered often depends on the type of subcontractor, your policy's terms, and your insurance provider's requirements. Generally, while you might be responsible for claims arising from a bona fide subcontractor (who works independently with their own tools), you should always notify your insurer about using subcontractors and verify that they have their own appropriate coverage.

When Coverage May or May Not Apply

Labor-Only Subcontractors: These individuals are often included under your existing policy because they work under your direct supervision and control.
Bona Fide Subcontractors: These are independent businesses with their own tools, equipment, and supervision. Your policy may or may not cover them, and your insurer needs to be informed.

Why You Must Take Action

Your Responsibility: As the contractor using the subcontractor, you are still responsible for their actions, especially if they cause damage or injury.
Contractual Obligation: Many contracts require you to ensure your subcontractors have their own public liability insurance.
Notification is Key: To have any chance of being covered by your policy, you must inform your insurance provider that you are using subcontractors.

What You Should Do

Review Your Policy: Carefully read the terms of your public liability policy to see if and how it covers subcontractors.
Notify Your Insurer: Contact your insurance provider to let them know you will be using subcontractors and discuss any potential coverage extensions.
Verify Subcontractor Coverage: Always obtain and review their certificates of insurance to confirm they have their own adequate public liability cover in place.

Can I get public liability insurance for a one-off event or temporary setup?

Yes, you can get public liability insurance for a one-off event or temporary setup, such as a festival, market, or short-term project. Many insurers offer short-term or event-specific policies tailored to cover the duration of the event, protecting against third-party claims for bodily injury or property damage.
Be sure to specify the event details, such as duration, location, and activities, to ensure appropriate coverage.

Are product-related claims covered under public liability insurance?

Product-related claims are NOT covered by a standard public liability insurance policy. Public liability insurance and product liability insurance are two separate types of coverage that protect against different kinds of risks. However, many insurers offer them as a combined package or add product liability as an extension to a public liability policy. How to get product-related claims covered:

If your business manufactures, distributes, or sells products, you should ensure you have specific product liability coverage. Here are your options:
Combined policy: Many insurers bundle public and product liability into a single policy, which can be a cost-effective and convenient option.
Separate policy: You may purchase a separate product liability policy to protect against the specific risks associated with your products.
Policy extension: Some insurers allow you to add product liability as an extension to your existing public liability policy.

The best approach is to speak with an insurance broker to assess your specific business risks and find the right policy for your needs.

Does public liability insurance cover incidents caused by my employees?

Yes, public liability insurance typically covers incidents caused by your employees that result in third-party bodily injury or property damage during business activities, as long as they are acting within the scope of their duties.

For example, if an employee accidentally damages a customer’s property or causes an injury to a third party, the policy would generally cover associated claims, legal fees, and compensation costs.

However, it does not cover injuries to the employees themselves, which would require workers’ compensation or employers’ liability insurance. Always review your policy for specific terms, conditions, or exclusions.

Can public liability insurance provide coverage for business activities overseas?

Whether public liability insurance provides coverage for business activities overseas depends on the specifics of your policy. In many cases, standard public liability insurance policies are designed to cover your business activities within a specific geographical area, typically the country where the policy is issued.

However, there are a few ways you might obtain coverage for overseas business activities:

Worldwide Coverage Add-on: Some insurers offer the option to add worldwide coverage to your public liability policy. This extends your protection to cover incidents that occur during your business activities abroad.
Separate Overseas Liability Policy: If your business frequently operates overseas, you might consider obtaining a separate public liability insurance policy specifically designed for international operations.
Travel Insurance: In some cases, travel insurance policies may offer limited public liability coverage for business trips.

How do I determine the appropriate coverage limit for my public liability insurance?

Determining the appropriate coverage limit for your public liability insurance involves assessing your business’s specific risks and needs. Here are key factors to consider:

Nature of Your Business: High-risk businesses, like construction or event planning, may face larger claims due to potential for significant injury or property damage, so higher limits are often recommended.
Client or Contract Requirements: Some clients or contracts mandate specific coverage limits. Check any agreements or industry standards to ensure compliance.
Business Size and Revenue: Larger businesses with higher revenue or more public interactions typically need higher limits to cover potential claims proportional to their scale.
Location and Regulations: Local laws or industry regulations in your area may set minimum coverage requirements. For example, certain jurisdictions or venues may require specific limits for permits.
Claims History and Risk Exposure: Review past incidents or potential risks in your operations. If your business involves heavy equipment or public events, higher limits may be prudent to cover worst-case scenarios.
Potential Claim Costs: Consider the potential cost of claims, including medical expenses, legal fees, and compensation for property damage or injuries. Research typical claim amounts in your industry for guidance.
Budget and Affordability: Higher coverage limits increase premiums. Balance the need for adequate protection with what your business can afford.

What factors influence the cost of public liability insurance premiums?

The cost of public liability insurance premiums is influenced by several factors, which insurers use to assess the risk and potential cost of claims. These include:

Business Type and Industry
Business Size and Revenue: Larger businesses with higher revenue or more employees often pay higher premiums.
Coverage Limit
Claims History
Location
Nature of Activities: Specific activities, such as working with heavy machinery, hazardous materials, or large public events, can raise premiums due to elevated risk of injury or damage.
Number of Employees or Subcontractors: More staff or subcontractors can increase exposure to claims, leading to higher premiums, especially if they interact with the public.
Policy Excess: Choosing a higher excess (the amount you pay toward a claim) can lower premiums, while a lower excess typically increases costs.
Business Premises or Operations: Operating from high-traffic premises (e.g., a busy store) or mobile operations (e.g., construction sites) can affect premiums.
Insurance Provider and Market Factors

To manage costs, compare quotes from multiple insurers, ensure accurate risk reporting, and consider consulting EverBright to find a policy tailored to your business needs.

What steps are involved in making a claim against public liability insurance?

Making a claim against your public liability insurance involves a series of steps to ensure the process is handled efficiently and complies with your insurer’s requirements. Below are the typical steps involved:

Notify Your Insurer Immediately: Contact your insurance provider as soon as possible after the incident. Most policies require prompt notification, and delays could affect your claim’s validity. Provide basic details like the date, time, and location of the incident.
Gather Incident Details: Collect all relevant information about the incident, including:
Document Evidence: Preserve and compile evidence to support your claim, such as:
Complete the Claim Form: Your insurer will provide a claim form. Fill it out accurately, including:
Avoid Admitting Fault: Do not admit liability or make any payments or settlements with the third party without your insurer’s approval, as this could jeopardize your claim.
Submit the Claim: Send the completed claim form and all supporting evidence to your insurer, following their submission guidelines (e.g., online portal, email, or mail). Keep copies of everything for your records.
Cooperate with the Insurer: The insurer may assign a claims adjuster to investigate. Provide any additional information or access they request, such as site visits or interviews with employees or witnesses.
Await Assessment and Outcome: The insurer will review the claim to determine coverage and liability. They may:
Follow Up on the Claim: Stay in contact with your insurer for updates on the claim’s progress. If the claim is approved, the insurer will handle payments to the third party or their legal representatives.

Consult a broker or legal advisor if the claim is complex or disputed. By acting quickly and providing thorough documentation, you can help ensure a smoother claims process.

What is the coverage period for public liability insurance policies?

The coverage period for public liability insurance policies typically lasts one year, starting from the date the policy is issued or renewed. This is the standard duration for most policies, requiring annual renewal to maintain continuous coverage.

However, some insurers offer short-term policies for specific needs, such as one-off events or temporary projects, which may cover periods ranging from a few days to a few months, depending on the agreement. Always check your policy documents for the exact start and end dates, and ensure timely renewal to avoid gaps in coverage.

What potential add-ons can be included in public liability insurance policies?

Public liability insurance policies can often be customized with add-ons or endorsements to provide additional coverage tailored to your business needs. These add-ons extend protection beyond standard coverage for third-party bodily injury or property damage. Below are common potential add-ons that may be available, depending on the insurer and policy:

Product Liability Coverage:
Employers’ Liability Insurance
Professional Indemnity Insurance
Tools and Equipment Coverage
Business Interruption Insurance
Event-Specific Coverage
Subcontractor Coverage

Can public liability insurance be customized for specific industries or risks?

Yes, public liability insurance can be customized for specific industries or risks to address the unique needs of different businesses. Insurers often tailor policies by adjusting coverage limits, adding endorsements, or incorporating industry-specific add-ons to ensure adequate protection. Below are ways customization can occur and examples of how it applies to specific industries or risks:

Adjusting Coverage Limits
Industry-Specific Endorsements: Insurers offer add-ons tailored to industry risks.
Add-Ons for Specific Risks: Policies can include additional coverage to address unique risks.
Exclusions or Conditions: Policies can be customized to exclude irrelevant risks or include specific conditions, such as safety protocols, to lower premiums or align with industry standards.
Geographic or Operational Scope: Coverage can be tailored for businesses operating in specific locations, such as international coverage for exporters or localized coverage for small businesses.
Event or Project-Based Coverage: For temporary or one-off activities, like a pop-up shop or construction project, short-term policies can be customized to cover the specific duration and risks.

Consult with EverBright and assess your industry’s risks and recommend tailored coverage.

Get a quote for your upcoming project

CONTACT

Your Needs, Our Services

We offer free consultations. If you want to learn more, please contact us at info@ebactuary.com or 📞+852 3563 8440. You can also fill out our Contact Form, and we guarantee to get back to you within 24 hours.

Liability Insurance