Whether you’re just starting out in business or whether you’ve been self-employed for a number of years, you probably know that you need self-employed public liability insurance.
But other than the fact that you need it, and other than the fact that it can cost you a lot of money, what is self-employed public liability insurance? And what kind of situations can it help protect you against?
What does it cover?
When you are self-employed, you come into contact with a wide range of people such as customers and suppliers. If you accidentally injure them or damage their property, you could be found legally liable.
What this means is that you would have to pay compensation to the person in question for their injury or the damage to their property. In addition, there are usually legal fees and other expenses to take into account.
Self-employed public liability insurance covers the compensation, legal fees and other expenses. The insurance company will also handle the compensation claim on your behalf, so you don’t have to worry about dealing with solicitors.
Self-employed public liability insurance usually includes a host of other covers, including products liability insurance, tools and equipment cover and employer's liability insurance.
What is products liability insurance?
In the same way that self-employed public liability insurance covers you if people make a claim against you because you have caused an accident that results in them being injured or their property damaged, products liability insurance covers you if a defect in a product you have supplied injures a third party or damages their property.
Why is the indemnity limit so high?
The question most commonly asked after, “what is self-employed public liability Insurance?” is, “why is the indemnity limit so high?”
The indemnity limit is the maximum amount that the insurance company will pay in the event of a claim. The standard indemnity limit is £1,000,000, although many people decide to pay a small additional premium to increase that to £2,000,000, or even £5,000,000.
To most self-employed people, those seem like huge amounts of money – and they are. However, large claims do happen and they can happen to small businesses just as easily as large businesses. A claim for a spinal injury could easily cost hundreds of thousands of pounds, for instance. Similarly, if you accidentally start a fire or cause a building to be flooded, it can cost of a lot of money to repair the damage.
Products liability insurance also needs a high indemnity limit, but for slightly different reasons. As with public liability insurance, a defective product can cause a large claim, either because it results in a severe injury or serious property damage. But where products liability insurance is concerned, the indemnity limit applies to all claims arising out of that defect, even if it was a number of products causing the claims.
As an example, if you were a plumber installing sprinkler systems, a defect in those could cause a flood that ended up costing £100,000. But if a dozen of your sprinkler systems, all identical and therefore all containing the same defect, caused similar fires, a £1,000,000 indemnity limit would not be sufficient because in this example, the claims total would come to £1,200,000.
Who needs self-employed public liability insurance?
Now we have answered the “what is self employed public liability insurance?” question, we can see that anyone who self-employed needs this type of insurance. No matter what type of business you are operating, you will be meeting members of the public, whether those are customers or suppliers, or potential customers or supplier.
When you meet members of the public or supply products to them, there is a potential to accidentally injure them or cause damage to their products. And when that happens, the cost can be high.
So, in summary, anyone who is self-employed needs to have self-employed public liability insurance in place to protect themselves and their business.