If you run your own business, that means that you have some form of interaction with the public and should have public liability insurance (PLI). But what is PLI, and do you really need the extra expense of paying for cover?
What is public-liability insurance?
PLI is a form of insurance that covers your business's legal liability should you be sued for damages by a client, supplier or other person who has been injured or whose property has been damaged as a direct result of your business operations. Examples of businesses where PLI is essential include:
- retail outlets
- tradesmen (plumbers, decorators and so forth)
- riding schools
There are a number of different elements that make up PLI cover.
Total indemnity: This is the amount for which you are covered. The usual starting figure for this is $1 million, but if you own a company that has a high level of interaction with the public, you should consider a higher figure.
Areas of coverage: If you do business overseas, you will need to make sure that your insurer covers you for this. For example, not all insurers offer cover for work in the US because of its different legislation.
Excess: As with most other forms of insurance cover, you will probably be required to pay an excess figure if you have to make a claim on your PLI. However, excess figures are typically very low, in the region of a few hundred dollars.
Profession specifics: PLI is very often included as part of an insurance policy package that is specific to your line of business, so always make sure that you are not taking out a separate PLI policy when you actually already have coverage under your business-insurance policy.
How are PLI premiums calculated?
In general, the larger your company, the higher your premium will be. This is because PLI premiums are usually directly related to annual turnover. Trade-specific things such as working in dangerous environments are also taken into account.
If you run a business that involves any form of direct contact with third parties, then you should have PLI coverage. The exceptions to this would be someone who works remotely, on their own, carrying out all their business interactions online. For more information and advice on PLI and to make sure that you have the right amount of coverage for your business, have a chat with a local commercial-insurance specialist in your area.