Is Public Liability Insurance Compulsory By Law?
In the United Kingdom, public liability insurance is not compulsory. However, this does not make it less important as it is still one of the most popular types of cover businesses obtain, guaranteeing that they would be protected against third-party claims.
ven though it is not necessary, and there are no legal consequences for not having it, there can still be monetary issues associated with omitting this policy from your business insurance. There is a significantly higher risk of customer claims leading to financial instability. But is Public Liability Insurance Compulsory By Law?
If you would like to read more information or learn more about the pricing of business insurance, you can do so here.
Firstly, What is Public Liability Insurance?
Public liability insurance was introduced to protect a business’ finances when they received claims against them made by third parties. These claims could be either physical injury or property destruction, but either is ordinary in companies where employees and clients come into contact each day. Examples include travel agents for which customers must book appointments, lifestyle consultants who meet clients at their office, gyms, teachers, shops, and many more.
Public liability is beneficial because several accidents could happen at the office or establishment, like tripping over equipment on the floor, slipping on wet surfaces, or even colliding with a member of staff; usually, these incidents are not severe, but sometimes they can be fatal. But is public liability insurance compulsory by law?
Why is Public Liability Insurance Important?
Public liability insurance is not a legal requirement, but there are many reasons that it should be acquired. Firstly, and most importantly for the company, it is cost-efficient. The average insurance payout for public liability is £13,500, in stark contrast to the £118 average annual premium.
This is a save of over £13,000. A business could otherwise expand its customer base through marketing or renting new spaces to increase the chain, which profits the company even more by developing. On the other hand, without insurance, this considerable loss could result in employee cuts, salary reductions, and even closure in the worst-case event.
Another reason to obtain public liability insurance is that many customers are aware of the risks involved when a company does not have a comprehensive and secure cover. Customers that invest a lot of money into a business through working with them frequently and closely may often ask if you have public liability insurance and refuse to be a client without it.
This is because medical treatment expenses for bodily injuries or replacement costs of the damaged property can be pretty hefty. Customers are aware that it may be a while before they are compensated for their accident without insurance. When ensured that you have an inclusive policy, they feel much more comfortable utilizing the services.
For small businesses especially, public liability insurance could be the difference between successful and failed businesses. Approximately one-fifth of businesses shut within the first two years because of low revenue and little customers. As it is already difficult to develop in the world’s current economic state, any extra expenses can be detrimental, and prevention strategies should be implemented.
A low-value cover of £1 million can cost as little as £50 annually and protect knowing that the insurer covers any minor or medium accidents for a new business. As the business gradually increases its profits, additional cover can be obtained for an even more inclusive policy aimed at larger businesses.
Which Types of Insurance Are Compulsory?
In the UK, only one type of insurance is legally required. Employers’ liability insurance has been mandatory since 1969, as stated by the Employers Liability Act, with at least £5 million worth of cover. However, for businesses with higher revenue and more employees, £10 million is encouraged. All in all, it is useful when claims arise from workers stating that they were physically harmed in their job or became ill from their services.
Employers’ liability protects both the employers from the extra expenses associated with this and the employees by reimbursing them for their medical costs associated with their injuries or illnesses. Professions in which this insurance is most prevalently used are construction workers like builders, electricians, plumbers and welders as their jobs are riskier and cost more for insurance companies to insure. Additionally, each employee’s costs decrease as more workers are employed, so premium costs are not as expensive as they seem.
Is Public Liability Insurance Compulsory – To Conclude
To conclude, public liability insurance is not compulsory by law. Nevertheless, it is critical to obtain when assessing risk management techniques as it provides security and more financial freedom. Employers’ liability is also beneficial and the only legally required cover.
Find out more about the importance of insurance here.
Other useful links about Business Insurance:
Project Manager Insurance
Property Manager Insurance
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