A typical small to medium business in the UK will pay roughly £120 per year for public liability insurance. However, a small business’s public liability insurance cost can be quite a bit cheaper or more expensive than this, depending on the industry, business structure and other factors. In fact, prices can range from under £50 to over £700 a year or more for some businesses.
What affects the cost of public liability insurance?
The cost of public liability insurance varies a lot from one business to the next. Why? Insurers take into account a whole host of factors when determining a rate, including how much risk a business presents. Here are some of the factors that affect public liability insurance prices.
Pay monthly vs pay annually
Generally speaking, businesses will pay for their public liability insurance annually because policies are relatively cheap. That said, a company that must pay a high premium due to the nature of their business surely can arrange for monthly payments to spread the cost out over the year.
Doing so, however, might cause a business’s overall insurance costs to rise. Why? Insurance providers might charge a monthly finance fee for this service, as they are essentially loaning money to the business. This is common on many other types of insurance as well. Finance charges can vary but tend to hover around 18-22% in today’s market. Depending on who is providing the financing, your rate can vary.
Businesses who use a broker to arrange their business insurance might find that they’re offered monthly repayments instead of annual via a separate finance company. In that case, you will need to sign a separate credit agreement.
A business that operates in an industry where dangerous tools are frequently used or where dangerous conditions are present will pay more than the average cost for public liability insurance. For example, builders, landscapers, and some tradespeople can pay significantly higher liability insurance rates. There can be a risk of falling debris and objects on a building site, sharp tools, unstable ground, and more. Pubs and bars are also likely to pay more than a typical business due to the risk of intoxicated customers having an accident on the premises.
On the other hand, an accountant or mobile hairstylist would pay less for cover since there is typically less physical risk to the public from these professions.
Type of business structure
The good news for self-employed people is that sole traders typically pay the least for public liability insurance. How do liability quotes for other types of businesses compare?
You might be interested to know that the way your business is set up can have a bearing on the price you’ll pay for coverage. Sole traders usually pay the least, then partnerships and finally limited companies. And, surprisingly, limited companies with multiple directors usually end up paying more than companies with only one director.
Also, there are many other factors that an insurance underwriter takes into account when determining the cost of a public liability insurance premium. For example, business turnover, location and previous claims history are just a few influences that will affect business liability quotes.
What does public liability insurance cover?
Public liability insurance covers personal injury and property damage claims made by third parties for incidents that were related to your business activities. Public liability covers both legal costs to defend against a claim as well as any compensatory damages the business is required to pay.
A business that deals physically with the public should consider having this type of business insurance. Businesses who only work remotely and are never exposed to customers, clients, or other public members in person probably won’t need public liability insurance.
Public and employers’ liability insurance
Public and employers’ liability insurance policies combine the two most common types of business insurance into one. The public liability coverage protects against personal injury and property damage claims arising from business activities that are brought by members of the public like customers, clients, vendors, passers-by and so on. The employers’ liability insurance coverage protects against claims made by workers that they’ve been injured or fallen ill due to their employer’s negligence.
There are advantages to combining these two types of business cover. First, a business might secure a discount on their liability insurance, buying them both from one provider. Second, buying them together ensures you’ll have the same payment and renewal dates, which can save you time and safeguards that you won’t miss an insurance renewal. Third, you’ll have one point of contact for managing any amendments to your policy like a change of address or an increase in the number of employees.
While a typical business pays around £120 a year for public liability insurance, you may find that your business needs to pay more. To help you secure a cheap premium it’s usually a good idea to compare prices and get quotes from multiple sources. You can check with insurance companies that sell directly to businesses, comparison sites and brokers. This can take some time, but a business might find a discounted price for their public liability insurance this way.