Public liability insurance provides financial protection for any legal expenses and penalties if someone sues you for onsite injuries or property damage. The coverage works best for businesses allowing customers or visitors on their property, whether a construction business or local motel. However, consider that general liability may provide this coverage and more at a slightly higher cost.
Public liability insurance is a type of business insurance that protects you if someone gets injured or their property damaged while interacting with your business. Public liability refers to damage from physical surroundings and property, rather than damage from services you provide.
The damage is typically related to your daily operations, not your specific industry or profession. For example, a public liability policy can cover you if someone falls on your restaurant’s unmarked wet floors. It may not cover you if you’re a flooring professional that recommended a slippery type of flooring to a client.
Public liability vs general liability insurance
Public liability insurance strictly covers damage or injuries that happen on your business’s property. The damage is related to your business’s daily operations, not your industry.
However, general liability insurance includes some coverage for damage away from your business’s premises, called product liability. General liability also can include coverage for advertising and personal injury errors like slandering a competitor or using misleading ads. General liability includes broader coverage than public liability insurance.
What does public liability insurance cover?
Public liability helps your business pay for a number of expenses and damage:
Legal liability. Public liability provides coverage when a court finds you legally responsible for damage to someone else’s property or personal injuries to someone else. You’ll pay for the cost of that damage, pain and suffering and any civil penalties.
Legal costs. Your policy will cover the costs of your legal defense when a customer or another party files a claim against your business. Those may include hiring a defense lawyer or paying court fees.
First aid expenses. Public liability helps with expenses if the injured person is given first aid at the time of an injury and during additional related visits.
Different levels of coverage. Most insurers offer a choice for the maximum payment you can receive, like $10 million or $20 million.
Coverage for employees. Public liability coverage for your business includes protecting your director, business partners, executive officers or employees. This coverage applies when these individuals are acting on behalf of your business.
Compare business insurance for public liability
How much does public liability insurance cost?
You won’t find an exact average for public liability policies because general liability is the more common type to buy. For general liability, many businesses pay less than $50 a month, although some pay a few hundred dollars. Public liability tends to cost less than general liability because it has more limited coverage.
What factors influence the cost?
The cost of your policy depends on your business’s unique circumstances. The insurance company analyzes your business to determine the likelihood that damage or injury could occur. It may take into consideration:
What your business does. Some industries attract more risk than others. For example, your business risks more injuries at a construction site than a retail store.
The size of your business. The larger the business, the higher the risk of injury or damage. That can include your annual revenue, volume of sales or employee count.
Your business location. Expect a higher premium if you work in a high-risk location like an airport, construction site, railway station or mine.
The structure of your policy. You can affect the price by choosing a higher or lower deductible, annual benefit limits or bundling several types of insurance together.
Past claims. Insurers compare your business’s work to past claims you’ve made. They factor the extra risk into your premium.
What’s excluded from public liability insurance?
The list of general exclusions on a public liability policy differs may include:
Costs of recalling, withdrawing, replacing or repairing your products
Damage from products you manufacture, sell or distribute
Damage to property you own or are responsible for
Damage that results from your Internet operations, including damage to your networks or from publishing electronic data
Defective work done or undertaken by you
Deliberate acts or omissions by the company or key leaders
Illnesses or injuries related to asbestos
Injuries to your employees
Making a refund on the price paid for defective products
Negligence in your duties or services
Operating a vehicle, airplane or watercraft
War or terrorism
Who needs public liability insurance?
Public liability insurance may suit your business if it has a physical premises or operates in public. Examples of different businesses that may benefit:
Contractors. Any business or independent contractor operating on a worksite could benefit from this insurance and may be required by contract to have it.
Entertainment. Dancers, performers, event organizers and media professionals can risk injuring someone else or damaging property such as the venue.
Health and beauty. Gyms, physical therapy centers and hair salons also bring the public to their premises. Even solo professionals may need public liability if they carry equipment that could injure someone.
Hospitality. Restaurants, bars, clubs and cafes create a fast-paced environment that could lead to injuries.
Retail. Grocery stores, book shops and department stores have physical locations with foot traffic, increasing the chances of someone getting injured.
How do I compare public liability insurance policies?
You can mull over your options while keeping these factors in mind about liability coverage:
Look for other products your business needs. Your business may need dozens of coverage beyond public liability. In that case, you may fare better or even nab a discount by going for an insurer with the whole package.
Get help with assessing your risk. Many business insurance companies offer risk consulting so you know exactly how much public liability risk your business involves. Then, you can set your annual limits accordingly.
Understand the exclusions. Every policy has a list of reasons it won’t pay for a claim. You may need extra coverage if your business faces an additional risk such as working around asbestos.
Consider general liability. Because public liability involves stricter coverage than general liability, consider whether general coverage would serve your business best. The small savings from a public liability policy may not be worth a denied claim if someone sues your business for an excluded situation.
Public liability insurance can protect your business from costly negligence claims while customers and visitors come on your premises. This policy may cost less than general liability, but you might consider whether your business needs the added coverage a general liability policy can bring. Either way, weigh your business insurance options beforehand to make the best choice.
Common questions about public liability insurance
Public liability insurance premiums are considered a business expense and are therefore tax-deductible.
It depends on your state or contract agreement with a venue or client. You’ll need to check with your state insurance laws or contracts to determine whether public liability is required.
Yes, many specialized event insurance policies offer one-day liability coverage. Be aware that the coverage may work as general liability for extended coverage.
Willam Eve is the country manager for Finder's Canada operations. He has previously held the positions of group publisher of insurance for Finder Australia and lead publisher for the Finder global team. William has a Bachelor of Communications from the University of Technology Sydney, Australia. He loves the challenge of launching Finder into new markets while helping grow Finder’s global team.
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