The Public Liability Insurance Blog

Why is public liability insurance cover so high?

calculatorThe standard amounts of cover offered by public liability insurance are £1m, £2m and £5m. For larger or more dangerous professions, £10m is not unheard of and for very small companies, £500,000 is also sometimes offered.

To anyone that isn’t the owner of a personal space rocket, any of these figures can feel like a huge amount of money and it might not be clear exactly why this level of cover is necessary.

Even if you had the opportunity to wade through the vast amount of claims data generated by any major insurer, you might be forgiven for thinking those figures are completely unnecessary as most claims run to a mere fraction of the total cover you are paying for.

With this in mind, why are these millions in cover actually recommended for your public liability insurance policy? As with many things in insurance, it’s all about the exceptional cases.

An expensive civil wrong and spiralling costs

Public liability is part of tort law, a division of law which focuses on civil rather than criminal wrong doings. The individual who has been wronged can take the one who has done the wronging to court if they feel they have been negligent and that they owed a duty of care to the individual in the first place.

coinsIn other words, if someone is responsible for someone else’s safety in some capacity and has been negligent in that responsibility, they can be taken to court if something goes wrong which then leads to some form of damage. This of course applies if you own a place of business where third parties enter and could potentially injure themselves.

A public liability claim can not only demand you to cover medical costs, but can also spiral out into further costs of care following an accident or even things like loss of earnings and loss of future earnings.

Medical costs will ultimately be a finite figure, but depending on who has been struck by your negligence and the long term implications of the damage, loss of earnings and loss of future earnings can very quickly get out of hand.

Legally speaking, there is a line that is drawn under this at some point, but it’s not always in the same place and before you know it, a million-pound figure is far from out of the question.

Insurance to the rescue

Once you are involved in a public liability lawsuit, you can be in for paying huge amounts of money and could equally be in for a long court battle. The spiralling costs are why public liability insurance will come in multiples of millions because just occasionally, that is exactly how much you will be liable to pay out.

Without public liability insurance, if you are the subject of a public liability lawsuit, you might be lucky and not have a huge amount to pay out, but you could equally find yourself with an impossible-to-foot bill that takes you out of business and bankrupts you.

YOUR Insurance is a broker specialising in public liability insurance for small businesses.