Product and public liability insurance protects your company from claims brought against your business by third parties, such as members of the public.
Public liability insurance is helpful for businesses that have public premises, provide services or sell, manufacture or supply products to the public.
Similarly, product liability insurance protects businesses against claims arising from goods sold or supplied that cause injury or damage to customers or their property.
Both these types of insurance can be purchased separately, but many businesses get them as part of a packaged or combined business insurance policy.
Although both insurance policies protect your business from claims by third parties for injury or property damage, product and public liability insurance are technically different.
The main difference is how the injury or damage occurred: either from a product you sold, supplied or manufactured on your premises or as a result of your employee's actions.
Public liability insurance protects your company from claims made by third parties, like the public or other businesses, if they suffer injuries or property damage related to your business.
This refers to instances where someone, such as a customer or visitor, gets injured or their property gets damaged due to your business operations or services. The standard coverage limit public liability insurance provides is usually between £2 million and £5 million for each incident or occurrence.
Public liability insurance covers any costs your business is liable to pay due to claims from third parties.
If someone makes a claim against your business, and it’s successful, you’re likely to be responsible for your legal costs, the third party’s legal costs, and any compensation you’re liable to pay. Without public liability insurance, this could have an enormous financial impact on your business.
Public liability insurance doesn’t cover injury, illness or death of employees, damage to your own property, intentional damage caused by employees or professional errors.
No. You’re not legally required to have public liability insurance as a business in the UK, and it won't be necessary for a handful of companies.
However, the financial impact of not having it if something happens and your company is liable could be massive, potentially bankrupting your business.
Additionally, businesses or organisations may not work with you if you don’t have public liability insurance.
Product liability insurance protects your business from claims by third parties for injury or property damage arising from goods you’ve sold, manufactured or supplied.
With product liability, the standard limit of indemnity is usually between £2 million and £5 million for each occurrence and during any one period of insurance.
Even if you don’t manufacture a product, you could still be liable if a faulty product you supplied or sold to a third party causes injury, death or property damage.
Product liability insurance covers your company for claims brought by third parties for injury, death or property damage caused by a product your business supplied. This includes the supply of food products that cause a third party to become ill.
Just like with public liability insurance, product liability covers any legal costs incurred by you and the claimant and any compensation you’re liable for.
Product liability insurance isn’t a legal requirement, but if you manufacture or supply products, you should seriously consider it. Some online marketplaces, such as Amazon, will not list your products if you don’t have product liability insurance.
The financial ramifications of not having product liability cover can be huge. You need to think carefully about whether your business could withstand the potentially millions of pounds worth of costs associated with being sued by a third party.
It’s common for product liability to be sold in conjunction with public liability insurance, and it’s not particularly common to be able to purchase a standalone product liability policy.
However, not all public liability policies will cover product liability, so if you need product liability insurance, double-check what’s included before purchasing an insurance policy.
Whilst neither of these types of commercial insurance is legally required, if you have a business with premises that any third party will visit or you sell or manufacture products, it’s something you should consider investing in.
Businesses have different risks, and not all will need product and public liability insurance.
For instance, if you provide professional services such as financial advice but you don't sell or supply products, you won't need product liability insurance.
If your business involves selling second-hand products, such as in an antique retailer, where it may be challenging to locate the original manufacturer, then having product liability insurance becomes crucial.
In many cases, product liability claims will be directed towards the manufacturer; however, if they can’t be traced or have gone out of business, the supplier will likely become liable.
Public liability insurance will cover accidental injury or property damage caused by your employees. However, it doesn’t cover deliberate damage or injury caused to third parties by your employees.
Public liability insurance will also not cover claims for an employee's injury, illness or death. For this, you will need employers’ liability insurance.
Employers’ liability insurance is a legal requirement for the vast majority of businesses with employees in the UK.
Public liability insurance covers consumer-facing businesses for claims of injury or property damage from a third party.
Professional indemnity insurance covers businesses for claims brought by clients for professional mistakes or negligence. Professional indemnity deals more with cases dealing with libel, defamation or breaches of copyright rather than injuries or damage to property.