How much does public liability insurance cost?

Even if efficient health and safety procedures are in place at work, accidents still happen. However, if a business is found to be at fault, the legal costs and compensation payments can be significant.

In this video, part of our Public Liability FAQ series, we answer the question ‘How much does public liability insurance cost?’.

An accident claim, together with associated costs, could be enough to put many smaller businesses into serious financial difficulty. There is also the possibility of the worst-case scenario: the closure of the business. 

Public liability insurance can cover the costs associated with a claim, helping to ensure that businesses are able to weather the financial impact. 

The cost of public liability insurance premiums 

Will the type of business I am in affect my premium?

Premiums between and within industries can vary. This is often down to the level of risk any one business is exposed to. 

For example: within the construction industry, builders, electricians, or businesses using dangerous equipment, will usually pay more than carpenters.  

Does the legal structure of my company matter? 

Whether a business is operating as a sole trader, limited company, or partnership may affect how the premium is calculated.

Can the location of my business affect my premium? 

Being in a remote or rural location may cost less than a central or urban location, where the chances of an accident are naturally higher.  

What other factors influence how risk is calculated?

Whether the premises are frequented by members of the public (e.g. a busy storefront), and if work takes place in public spaces – indoors or outdoors. 

To obtain a quote, what information do I need to provide?  

Insurers will want to know the business’ annual turnover, number of employees, and health and safety record.  

Much like car insurance, if a business has a poor track record of accidents or a previous claim against them, their premium is likely to be higher. 

It’s important that you provide accurate information. Not only will this affect your premium; incorrect information could nullify protection against a future claim. 

What factors, other than risk, affect my premium? 

The choice of insurance company, exact extent of cover chosen, and any excess payment term may affect the premium. Policy exclusions, i.e. specific activities or conditions not allowed under the policy, will also have an impact.  

Will the level of cover I choose affect upfront cost? 

Standard public liability insurance includes coverage up to £1million, £2million, £5million or £10million. The smaller the amount of coverage chosen, the lower the premium is likely to be.  

Should I go with the lowest level of cover? 

For most small businesses, somewhere between £2million and £5million is normally enough. However, it is important to be realistic when making the decision. Insufficient cover could cause a problem, in the event of a claim. 

Also: bear in mind some public and private sector construction  projects specify the minimum amount of public liability coverage needed for a contract.  

Where can I get more advice on the correct level of cover for my business? 

If in doubt, check with a relevant trade body or any professional association – not just with friends or colleagues.  

How much is a typical public liability insurance premium? 

The price individual businesses pay will vary, based on some of the factors mentioned above. As a ballpark figure, typical premiums for a small business can range somewhere between £100 and £500. However, it is impossible for an insurer to know without first understanding your circumstances. 

The first step will always be to obtain a quote. 

Is public liability insurance worth the cost? 

When it comes to business insurance, the ‘cost’ is about more than the price of the premium; you also need to factor in the saving in terms of time and stress, in the event of a claim, in addition to the value of the business you will be safeguarding.