Public liability insurance

A clear guide to public liability cover

Public liability insurance helps protect your business if someone outside your organisation is injured or their property is damaged because of your work. It is not a legal requirement for most firms, but it is often a practical one. Many clients, landlords, and local authorities require it before they will hire you, grant permits, or allow you on site. For many UK SMEs, the right cover can prevent a single accident from becoming a financial crisis.

In 2025, typical limits in the UK range from £1 million to £10 million, with £6 million common for small to medium-sized businesses. Premiums vary by sector and risk profile. The market is currently buyer friendly, with rates down across many commercial lines and insurers offering longer-term deals. Even so, pricing is personal to your activities, turnover, claims history, and location. A careful review of your exposures - including any work at height, public footfall, or high-value property - will help you choose an appropriate limit.

Regulatory changes have also improved the experience for policyholders. The FCA’s Consumer Duty and enhanced claims standards are raising expectations around fair value, transparency, and timely communication. That means clearer policies and better claims handling, which helps you understand what is and is not covered before you buy. This guide walks through the essentials in plain English so you can compare options confidently and avoid surprises if you ever need to claim.

Insurance can offer real financial protection, but only when you know exactly what you are buying.

What is covered - and how claims usually work

Public liability usually covers compensation, legal expenses, and associated costs if a third party - such as a customer, passer-by, or site visitor - suffers an injury or property damage due to your business activities. If a display collapses and injures a shopper, or a coffee spill damages a client’s laptop, this is the type of cover that responds. Policies often include product liability when your products cause harm, but check whether this is bundled or separate.

Common exclusions include deliberate acts, fines and penalties, damage to your own property, and injuries to your employees. For staff injuries or illness, you typically need employers’ liability insurance, which is a legal requirement for most UK employers. Some activities, like working at height or with heat, are covered only with specific conditions. If you operate in higher-risk sectors such as construction or hospitality, expect tighter wording and higher premiums.

When a claim arises, notify your insurer promptly, provide evidence such as incident reports, photos, witness details, and invoices, and avoid admitting liability at the scene. The insurer will investigate, appoint solicitors where needed, and negotiate settlement within your policy limit. New claims handling standards in the UK emphasise faster updates and clearer communication, which should reduce delays and uncertainty. Keep good records of risk assessments, maintenance checks, and staff training - these can materially improve outcomes.

Who benefits most from this cover

Public liability insurance is particularly relevant for businesses that interact with the public, work on client sites, or handle third-party property. Tradespeople, retailers, cafés and restaurants, market stallholders, events organisers, beauty therapists, cleaners, consultants visiting offices, and contractors entering residential or commercial premises all face day-to-day exposure. Local authorities and principal contractors frequently insist on minimum limits before granting access or contracts.

If you operate solely online with no physical public interaction, your exposure may be lower, but not necessarily zero - goods you ship and equipment deliveries can still cause damage. If you employ anyone, separate employers’ liability cover is likely required by law. For those with minimal public contact and very low turnover, basic public liability might be sufficient, but ensure the limit aligns with potential claim severity in your sector.

Choosing a suitable level of protection

1. Basic cover - £1m to £2m

• Suits micro businesses, home-based traders, and low footfall services.
• May include product liability; check territorial limits and any height/heat restrictions.
• Consider only if your contracts and venues do not require higher limits.

2. Standard cover - £5m to £6m

• Common choice for UK SMEs in retail, hospitality, trades, and light services.
• Often meets typical contractual requirements from landlords and local authorities.
• Balanced option where third-party injury risk is meaningful but not extreme.

3. Enhanced cover - £10m+

• For higher-risk activities, larger venues, or contracts that mandate higher limits.
• Typical for construction, events, or where public footfall and severity potential are high.
• May be structured with excess layers to achieve higher total limits cost effectively.

4. Useful add-ons and related options

• Product liability - if supplied goods could cause injury or damage.
• Tools or business equipment - protects items you rely on for work.
• Contract works - construction materials and works in progress on site.
• Professional indemnity - covers financial loss from professional mistakes.
• Cyber liability - increasing relevance, especially with rising incident costs.

Match the limit to worst-case scenarios in your world, not the cheapest premium.

What it costs and what shapes the premium

Pricing remains profession-specific and subject to underwriting. Long-term agreements can offer stability, but review terms carefully to ensure fair value throughout.

Eligibility - what insurers look for

Most UK businesses can apply for public liability insurance, including sole traders, partnerships, and limited companies. Insurers usually ask for details about your activities, turnover, claims history, health and safety measures, subcontractor usage, and any work at height, with heat, or in hazardous locations. They may also request method statements, risk assessments, and proof of staff training where relevant.

Applications can be declined or priced higher if there are significant prior claims, inadequate risk controls, undisclosed high-risk activities, or work that falls outside an insurer’s appetite, such as certain demolition or hot works without controls. Being precise about what you do and where you do it helps avoid cover gaps. If you employ anyone, be aware that employers’ liability is a separate legal requirement in most cases and may be requested alongside your public liability policy.

From quote to claim - the key steps

1. Gather details of activities, turnover, locations, and any subcontractors.
2. Use a comparison tool to obtain like-for-like quotes and policy summaries.
3. Choose an appropriate limit after reviewing contract and venue requirements.
4. Check exclusions, endorsements, excesses, and height or heat conditions carefully.
5. Purchase and store your certificate; share it with clients if required.
6. Maintain risk controls and records to support smoother claims handling.
7. If something happens, notify your insurer promptly and follow their guidance.

Weighing it up - benefits and drawbacks

Key checks before you commit

Before buying, read the schedule and wording closely. Confirm the limit of indemnity, policy excess, territorial limits, and any endorsements that restrict specific activities such as height, heat, or use of subcontractors. Note any inner limits or aggregates that cap the insurer’s total annual payout. Understand renewal pricing and how changes in turnover or operations should be reported. Keep proof of training, maintenance logs, and incident records, as these support claims and can influence outcomes. If you employ staff, arrange employers’ liability alongside your public liability to stay compliant and protected. Finally, ensure the policy aligns with contract requirements from landlords, councils, or main contractors.

Alternatives and related protections

1. Employers’ liability insurance - legally required for most employers; covers employee injury or illness claims.
2. Professional indemnity insurance - protects against financial loss due to professional advice or design errors.
3. Product liability insurance - for manufacturers, wholesalers, and retailers with product-related exposures.
4. Cyber insurance - addresses data breaches, ransomware, and business interruption from cyber incidents.
5. Commercial property and tools cover - protects your own premises, stock, and equipment, which public liability does not.

Frequently asked questions

Q: Is public liability insurance a legal requirement in the UK? A: Not generally. It is often required by contracts, venues, and local authorities. If you employ anyone, employers’ liability is usually a legal requirement separate from public liability.

Q: How much cover do I need? A: Many SMEs choose £5m to £6m to satisfy contract needs and potential claim severity. Check venue requirements, your risk profile, and worst-case scenarios before deciding on a limit.

Q: What does it not cover? A: It does not cover employee injuries, your own property, deliberate acts, or fines. High-risk activities may have conditions or exclusions. Read endorsements and inner limits carefully.

Q: How are premiums calculated? A: Insurers consider your activities, turnover, claims history, location, and chosen limit. Market conditions in 2025 are favourable, but high-risk professions still pay more.

Q: Can I reduce the cost? A: Maintain strong health and safety practices, keep clean claims records, choose a suitable limit, and compare quotes. Longer-term agreements may offer price stability if terms suit you.

Q: What sectors face higher risks? A: Construction and events often face elevated risks due to work at height and large footfall. Retail and hospitality manage frequent public interactions and slips or trips.

What to do next

Take a moment to map your real-world risks and any contract requirements. Use a comparison service to review like-for-like quotes, focusing on limits, exclusions, and claims support rather than headline price. Choose the cover that matches your exposure and gives you confidence, not just the cheapest option. You remain in control at every step.

Important notice

This guide provides general information only and is not personal financial advice. Policy terms, exclusions, and prices vary by insurer and your circumstances. Always read the full policy wording and schedule before purchasing, and seek professional advice if unsure.