Public liability insurance guide

signing a public liability insurance policy
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The life of a business owner isn’t always easy—like how walking a tightrope while juggling fire isn’t always easy. It’s a risky gamble that can pay off, especially if you play your cards right. That said, all it takes is one disaster, one slip, one fall, one defective product to land a costly liability suit on your front door. 

Whether your business is big or small, few things are more important than protecting yourself from liability with an insurance policy. Because, even if your operation is by the books, things can go wrong in an instant, and sometimes they’re impossible to predict. Recently, one type of policy that many small businesses have been signing up for in order to reduce their risk is a public liability insurance policy. 

But what is a public liability insurance and is it worth getting for your business? Keep reading to find out more. 

Public liability insurance

As the name suggests, public liability insurance is a type of policy that safeguards a business from liability claims and suits alleged by members of the public at large. In most cases, liability insurance covers instances where customers, visitors, or delivery personnel suffer an accident, injury, or property damage on the company grounds. When a suit is alleged, the public liability insurance policy kicks in and can help cover the cost of the lawsuit, including defense fees, damages, and settlements, regardless of who was at fault. 

A public liability insurance policy is most commonly used in England and Australia. In the States, most businesses would favor a general liability insurance policy instead, because it provides more comprehensive liability coverage. That said, public liability insurances tend to be cheaper and with some searching, you may find a public liability insurance policy that is adequate to protect your business. 

Does your business need it?

Is your business completely remote and done from your home? Then a public liability insurance might not be the right thing for you, but if your line of work brings you and your employees into contact with the general public on a regular basis, then it might be a worthwhile investment.

Just think about all the ways your work or workplace could lead to injury or damage to a third party.

Do you have customers that regularly visit your location and then stay for an extended period of time?

  • Retail
  • Restaurant
  • Salon

Do you work at a client’s business or home?

  • Contractors
  • Interior designers
  • Massage therapists
  • Acupuncturists

Do you work in public?

  • Builder
  • Entertainer
  • Demolition and debris removal

Whether a client or a member of the public, each person that walks onto your premises represents a possible liability suit. All it takes is one bodily injury claim to harm your business’ trajectory.

Although there’s no legal obligation to have public liability insurance, there are several circumstances that may dictate purchasing a plan, including:

  • If you have an event that’s open to the general public and on public property, you’ll be required by the city to obtain a permit. In order to get that, the city may also require that you show proof of having some form of public liability insurance.
 
  • If you seek a business loan, particularly with a SBA loan guarantee, the lender will likely request proof of liability insurance; that way a liability claim can’t force you out of business and thus default on the loan.
 
  • If you wish to lease a property, the property management company or landlord may request that you get a liability policy first.

What does public liability insurance cover?

A public liability insurance covers a business from three different costs that may arise from a lawsuit against your business. They include:

Bodily Injury – If someone is injured on your business property—whether inside the building, on the sidewalk, or in the parking lot—a public liability insurance could help cover the costs. For example, let’s pretend you’re a contractor that owns a storefront on your city’s main street. A random passerby walks by your office and is hurt when your sign comes crashing down on them. The unlucky victim is rushed to the hospital and diagnosed with a concussion and neck strain. Later, they file a liability claim, seeking to recoup the cost of the hospital visit and physical therapy.

Property Damage – If while you’re working you damage a third party’s property, public liability insurance could help cover the costs of repairing, fixing, or replacing it.

Taking the same contracting business for instance, let’s say you’ve been brought in to survey and then appraise a client’s home for a remodel. As you go through your routine inspection, you knock over an expensive piece of modern art, causing it to shatter. Even though the client understands that it was an accident, they still want you to pay for a new piece.

Legal Expenses – If you’re taken to court for a liability suit, you’re going to need to hire someone to defend you, especially if you weren’t at fault. Your public liability insurance policy could help cover the costs of legal representation.

What does public liability insurance not cover?

It’s important to note that a public liability insurance policy isn’t comprehensive, nor does it provide nearly as much coverage as a general liability insurance policy. But where is it lacking? 

  • It doesn’t cover you from accidents that happen to you, the business owner, during business.
  • It doesn’t cover the costs involved to protect your business from defamation charges such as libel or slander.
  • It doesn’t cover accidents and injuries to your employees. You’d need workers’ compensation for that. 
  • It doesn’t cover false statements made by the company in advertising.

Compared to public liability insurance, general liability insurance has a much broader scope of coverage, especially since it encompasses some aspects of personal liability. This is why most every business in the U.S. opts for general liability instead. Although there may be some cost savings with a public liability insurance, the difference in cost is a lot smaller than the difference in what’s covered.

Get covered with Thimble

There’s no doubt that public liability insurance is an important way your business can mitigate risk. That said, with Thimble, there’s a better way. 

Thimble offers small businesses a newer, more affordable type of on-demand general liability or professional liability insurance policy. You can pick a policy as short as an hour, starting at $5. Thimble works when you do and lets you save when you’re off. Go from zero- to total-coverage in less than 60 seconds. Just download the Thimble app (or click “select a quote”), sign up, and get protected.  

Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.

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