Public liability is also known as third party liability. Although this type of insurance is not a requirement by law it is an essential insurance to protect against yours and your company’s liability to pay damages to members of the public or third parties for death or bodily injury or damage to their property which is a result of a negligent act by an employee or sub-contractor used by your company.
The need for public liability insurance
The easiest way to understand the need for public liability insurance is to look at the costs you can face if you don’t have it. Successful claims against a company can quickly add up to thousand or hundred of thousands of pounds.
The other reason for public liability insurance is that it will help you to gain new contracts of keep existing ones. In the construction industry it is nearly always a contractual requirement that you have public liability insurance. You will also need to be able to show them a copy of your insurance certificate.
If you had public liability insurance prior to the contract, and either didn’t renew it or cancelled it for some reason, that would put you in breach of contract.
It would be reason enough for the client to withdraw from the contract. In a worst-case scenario, they might sue you for damages, due to you breaking the terms of the contract.
What limit of indemnity do I need?
The limit of indemnity that a company will require will depend on the potential exposure around them and may also be governed by minimum requirements of an employer. Occupations that are deemed high risk like welding or scaffolding are likely to require higher levels of indemnity compared to other contractors that are deemed lower risk.
What factors affect the price of my insurance?
The price of insurance is always influenced by the risk that the insurer deems you to be. Therefore, if you work in a profession that the insurer believes is high risk then your insurance premium is going to be higher. Some of the factors affecting your insurance are:
- Limit of indemnity
- Use of heat
- Height limits worked at
- Depth limits worked at
- Claims history
- Size of the company often measured by turnover
- Quality of health & safety provisions
- Types of sub-contractor such as bonafide or labour only
- Type of properties or location worked at
- Directors adverse credit history or criminal convictions
Good risk management strategies can help keep costs down
Insurance is worked out on your claims history and your perceived risk. If you have a proactive risk management plan to keep you and those around you then the chances of injury can be reduced, which benefits everyone. There are less injuries, less claims, and hopefully a lower insurance premium.