What is Public Liability Insurance for Self Employed?

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According to UK consumer research firm NimbleFins, public liability insurance for self-employed workers in the UK is designed to protect anyone who comes into contact with members of the public, customers and other businesses they might be sharing a worksite or office with. It will cover any costs (e.g. legal defence fees, compensation) if a third party believes someone working in a self-employed capacity caused property damage or personal injury and sues to recover their losses.

Compared to some forms of insurance, such as employers’ liability, public liability isn’t technically a legal requirement. However, it’s well worth the investment for anyone working in a trade where they’re going to be around customers or other third parties. The average public liability settlement in the UK is roughly £13,500, so self-employed workers should be cautious of the risk of operating around third parties if they’re not covered.

It could be as simple as a small dent in a wall or table that needs to be repaired for a small cost or as serious as accidentally leaving out a piece of equipment that causes someone to fall. Either way, holding public liability can help protect a self-employed worker just as it protects a company. Being self-employed means not having the protections that an employee at a larger business would have, so it’s the individual’s responsibility to sort out coverage before an incident occurs.

Apart from reducing the amount of risk, many clients will insist a self-employed person hold a policy before working with them. Even if a client doesn’t require public liability, it can still be considered a quality contractor mark. It will help prove commitment to reducing risk and being careful.

In terms of premiums, NimbleFins reports that the average policy for a freelancer costs around £50 to £80 per year, but this can naturally go higher for those working in an industry where there is more likely to be a serious incident (think sharp objects or tall heights versus desk work). The cost to settlement difference is quite stark. The average settlement is nearly 170x more expensive than annual cover, so it isn’t difficult to see why so many freelancers enjoy the safety net of public liability.

What does public liability insurance cover?

Public liability insurance is designed to cover situations where a third party (e.g. member of the public, customer, other business, etc.) claims personal injury or property damage and begins legal proceedings to reclaim their losses.

Public liability covers both the cost of any legal case (lawyers, advisory, etc.) and any compensation a court awards the defendant if the plaintiff is found to be at fault for the financial damages.

Many businesses consider public liability insurance a must-have, both for themselves and any other companies they engage with. It may be a prerequisite for a piece of work or a bidding/tendering process. Public liability offers peace of mind to both sides of the equation, reassuring potential customers that a provider is a risk-averse person/business and providing the insured with financial protection if something unfortunate does happen.

Public liability is often packaged together with product liability, as the combination of the two together can help protect business owners from many of the most common risks. Product liability will cover associated legal costs in the event that a product designed, manufactured or sold is responsible for causing injury, illness or property damage. It’s ideal for anyone involved in the sale or manufacture of goods/products and can be as useful to someone operating as a tradesman to baking cakes and cookies.

What does public liability insurance not cover?

If it isn’t related to a claim by a third party of injury or property damage, then public liability is extremely unlikely to cover it.

There are, naturally, a wide variety of insurances it’s worth being aware of, from professional indemnity cover (if a customer believes a business has been professionally negligent, perhaps not delivering what was promised or giving poor advice) through to employers’ liability (if an employee is injured or unwell due to work, also a legal requirement in the UK for anybody who employs staff). Simply put, self-employed people can face a variety of issues that can be helped by insurance.

How much is public liability insurance for self employed?

Self-employed public liability insurance is usually between £50-£80 annually, according to NimbleFins, but can be more for those working in a ‘high risk’ industry, such as welding or construction. It’s a relatively affordable insurance to buy.

When considering cost, be sure to consider the appropriate level of cover. The first £1 million of cover is usually the most expensive, so increasing to a higher level of coverage if needed can provide better protection for a reasonable additional cost.

Finding coverage is relatively easy for most self-employed people. Those working in dangerous or niche markets might need a broker to sort out a policy. Regardless, it’s often useful to check out a few aggregators, insurers and/or brokers to compare prices to find a good deal.

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