Public and Employers Liability Insurance

Do I need combined public and employers liability insurance?

Consider the following scenarios. Imagine if while carrying out your business you accidentally:

• installed faulty wiring in a house resulting in a fire which caused injury or even the death of someone living there.
• flooded a customer's home and they claim against you for the resulting damage.
• used a certain material which in later years is shown to cause health risks (eg asbestos, latex).

Or:

• You employ a carer to look after you and he or she slips and breaks an ankle on a worn carpet or loose stair tread and decides to sue you.
• An employee cuts through an electrical cable and suffers disfiguring burns.

Most tradesmen and companies who offer services and or/products to the general public and who employ more than one person need combined public and employers liability insurance.

Employers Liability Insurance is a legal requirement under the Employers' Liability (Compulsory Insurance) Act of 1969.

Public Liability Insurance is voluntary (although there are exceptions, eg, horse riding establishments) but it is always advisable to take out this type of cover also as damages claims can be run into thousands, sometimes millions, of pounds and put smaller traders out of business.

As a business owner or employer you have a legal duty towards the public to protect them from injury or wrongful acts done either deliberately or as a result of negligence by the business or its employees.

If a member of the public is injured or property is damaged as a result of your business activities then you could be held legally responsible and risk being sued. Public liability insurance cover will meet your legal liability to pay damages for death, injury or damage to property and any subsequent legal costs if the employer is found to be at fault.

There are cost savings to be made by taking out a combined Employers Liability & Public Liability Insurance policy which will meet your legal liabilities towards both the public and your employees.

What type of businesses need combined Employers & Public Liability insurance?

All types of companies, including sole traders, partnerships and limited companies who employ more than one member of staff require both public and employers liability insurance cover.

Employers liability insurance is required by UK law - every employer in the UK must have employers' liability insurance.

The only exception to this rule is where all employees are close relatives and the business is not incorporated as a limited company.

This will protect your business if a member of staff sues you for negligence which results in them suffering injury or even death in the course of their work.

Public liability insurance will not protect your business against this type of claim, as the cover solely relates to insuring your business against claims from third parties.

What is the difference between public liability insurance and employer's liability insurance - and do I need both?

Public liability insurance is not a legal requirement, but it is strongly recommended.

Depending on your type of business it may also include products liability cover, thus offering you valuable cover against legal liability to non-employees for injury or damage to property, including as a result of the products you supplied.

Examples of trades and professions which would benefit from taking out a combined public and employers liability insurance policy are:

• Builders
• Cleaners
• Plumbers
• Landscape Gardeners
• Electricians
• Joiners
• Arial erectors
• Steel erectors
• Roofing
• Hairdressers
• Mechanics
• Motor trade
• Garages
• IT consultants
• Corner shops
• Fast food outlets
• Restaurants
• Hotels
• Tradesmen
• Cafes

I don't employ anyone, I just have unpaid volunteers - surely I don't need employers liability insurance?

Yes, you do need employers liability insurance. Recent changes to the law requires you to take out employers liability insurance if you have unpaid volunteers. Many sole traders don't realise that the same rule applies when employing seasonal and part-time staff.

You can be fined up to £2,500 per day if you employ seasonal, part-time staff or unpaid volunteers and you do not have employers liability insurance.

Not only are you breaking the law, your business is legally liable for any injury or illness suffered by your volunteers while at work.