Running a business comes with responsibilities. Whether you employ a team, welcome customers onto your premises or work at client locations, there is always a chance that someone could be injured, or their property could be damaged.
Public liability and employers’ liability insurance can both help protect a business against compensation claims. However, they cover different people and different types of risk.
Understanding the difference can help you choose suitable cover for your business.
What is public liability insurance?
Public liability insurance is designed to protect your business if a member of the public is injured or their property is damaged because of your business activities.
This could include customers, visitors, suppliers or other people who come into contact with your business.
For example, public liability insurance may help if:
- A customer slips on a wet floor at your premises and is injured.
- You accidentally damage a client’s property while carrying out work.
- A visitor trips over equipment left in a public area.
- An item falls and injures someone visiting your business.
Depending on the policy and the circumstances, cover may help with compensation payments and certain legal costs linked to a claim.
Is public liability insurance a legal requirement?
Public liability insurance is not usually required by law in the UK. However, it can still be an important form of protection for businesses that deal with customers, visitors or members of the public.
Some clients, trade bodies, landlords and local authorities may ask you to hold a certain level of public liability cover before they agree to work with you. It may also be required as part of a contract.
Even a small accident could lead to a costly claim, so it is worth considering whether your business could afford to cover these costs without insurance.
What is employers’ liability insurance?
Employers’ liability insurance is designed to protect a business if an employee becomes injured or ill because of the work they do.
For example, an employee could:
- Fall from a ladder while completing a work task.
- Develop an illness after being exposed to a harmful substance.
- Injure themselves while using workplace machinery.
- Suffer back problems after regularly lifting heavy items.
If the employee makes a claim against the business, employers’ liability insurance may help cover compensation and certain legal costs, subject to the policy’s terms and conditions.
Is employers’ liability insurance a legal requirement?
In most cases, yes. If your business employs people in England, Scotland or Wales, you will normally need employers’ liability insurance from an authorised insurer.
Your policy must provide cover of at least £5 million. Businesses that do not have suitable cover could be fined up to £2,500 for each day they are not properly insured.
You must also make your employers’ liability certificate available to employees. It can be displayed at your workplace or made available electronically, such as through a company intranet. Failure to make the certificate available could result in a fine.
Some businesses may be exempt, including certain businesses that only employ close family members. However, the rules can vary, so it is important to check what applies to your circumstances.
Public liability vs employers’ liability: The main difference
The simplest way to understand the difference is to look at who each policy protects your business against claims from.
| Public liability insurance | Employers’ liability insurance |
| Covers claims made by members of the public | Covers claims made by employees |
| Usually optional | Usually required by law if you employ people |
| May cover injury or property damage | May cover work-related injury or illness |
| Useful for businesses that interact with the public | Important for businesses with employees |
For example, if a customer slipped in your shop, this could be a public liability matter. If an employee slipped while working in the same shop, this could fall under employers’ liability insurance.
The exact cover will always depend on the policy wording and the circumstances of the claim.
Does a business need both types of insurance?
Some businesses may need both.
For example, a café has employees who prepare and serve food, as well as customers who visit the premises. Employers’ liability insurance could cover claims involving employees, while public liability insurance could provide protection against claims from customers and other visitors.
A self-employed person with no employees may not need employers’ liability insurance, but could still benefit from public liability cover if they work with clients or members of the public.
Having one type of liability insurance does not automatically provide the protection offered by the other.
How much liability cover does your business need?
The right level of cover will depend on factors such as:
- The type of work you carry out.
- The number of people you employ.
- Where your business operates.
- How often you interact with the public.
- The equipment or materials you use.
- The requirements of your clients and contracts.
- The size and turnover of your business.
It is important to provide accurate information when arranging your insurance. If your business grows, hires more employees or starts offering new services, you should review your cover to make sure it still reflects your needs.
Protecting your business with suitable cover
Public liability and employers’ liability insurance protect against different risks. Knowing the difference can help you avoid gaps in your business insurance and meet your legal responsibilities.
If you are unsure which types of cover your business may need, the team at One Call Insurance can help you review your options. Get in touch for a straightforward conversation about your business and the protection available, with no pressure to make an immediate decision.
Cover is subject to the insurer’s terms, conditions, limits and exclusions. This article provides general information and should not be treated as legal advice.
