Public Liability Insurance
Public Liability insurance is arguably the most common insurance policy purchased by businesses of any kind – freelance contractors are no exception. Public Liability insurance is closely linked to Employers Liability Insurance, but may be purchased as a standalone policy by businesses who do not require cover for employees.
What is Public Liability Insurance & Why Do I Need It?
Public Liability Insurance (abbreviated to PL) covers the policyholder for claims made by third parties for property damage or personal injury. In the event of a claim being made against the policyholder, the insurer will fund the legal defence of the claim, as well as any subsequent damages for which the policyholder may be found liable.
In cases where manual work is carried out, it is easy to see where claims which would be covered by a PL policy may arise. Builders, scaffolders, plumbers, electricians and the like are likely to have accidence our cause damage to property in the general course of their work. However, even the most innocuous trades may lead to some form of property damage or personal injury – a spilled cup of coffee or carelessly placed wire could conceivably cause an injury for which a contractor may be held liable. The cost of defending such claims alone can prove extremely high, without even consideration for the cost of paying potential damages.
Our policies start from £1m cover; £2m and £5m policies are also available. In the vast majority of cases, contracts will specify that £1m PL cover is held by the contractor. An exception to this rule is the Energy Sector – contractors operating offshore will invariably require £5m PL cover. The minimum limits of indemnity required at contract are generally more than adequate for the types of liabilities faced by ltd company contractors, however risk will vary from business to business, so please feel free to contact the team to discuss in detail.
Public Liability insurance, like Employers Liability insurance, is written on a ‘losses occurring’ basis. This means you will be covered for claims relating incidents which occurred during the period of insurance.
One consequence of this is that cover must be in place from day one – cover cannot be backdated and public liability claims cannot be retrospectively insured. The upshot of policies that operate on a ‘losses occurring’ basis is that the period of time on cover remains insured after expiry of the policy – i.e. if an incident leading to claim took place during the period of insurance but the claim itself was not brought against the policyholder until after expiry of the policy, the policy in place at the time of the incident would react.
Am I legally required to carry Public Liability cover?
Except in some extreme examples (such as horse riding establishments) there is no legal requirement for businesses to carry Public Liability insurance.
The above being said, it is industry standard that contracts for services include the requirement for contractors to maintain Public Liability insurance during the term of the engagement. If there is any doubt surround the insurance requirements of any particular contract, the agency/end client should be consulted for clarification.