Is public liability insurance compulsory?

Am I legally required to have public liability insurance?

As a tradesperson or small business you are not legally required to have public liability insurance. However, that does not mean you will never need cover.

In this video, part of our Public Liability FAQ series, we answer the question ‘Is public liability insurance compulsory?’.

What circumstances require me to have public liability insurance?

In some industries and sectors, you will be required to have public liability insurance as part of your contract. This is common with public sector organisations and in the construction industry.

Of course, you don’t have to work for these organisations; you could choose to work only for clients that don’t require you to be insured. However, you would risk missing out on larger and possibly longer-term contracts. It could also undermine your business’ credibility if you refuse contracts on this basis.

Having public liability insurance is considered good practice, which makes you appear reliable and professional. Refusing to be insured may cause potential clients to doubt how financially stable and effective you are as a business.

What if it is in my contract, but I do not have or want insurance?

Most contractors who require public liability insurance will ask for proof that you have it at the time you sign or agree the contract. If you are not insured, but claim to be by signing, you would be in breach of contract. The contractor may be entitled to end the contract with you. In some circumstances, it may even allow them to bring a claim against you in the civil courts for damages.

Are there any other circumstances in which public liability insurance is compulsory?

You may find your trade association requires you to have insurance to be a member. Although they cannot force you to take out cover, they can refuse you membership. That could mean you lose out on valuable membership benefits. Not being a member of a professional association could also affect your professional standing.

What happens if I need to claim?

If someone brings a claim against you or your business for damages or compensation, not having public liability cover would mean paying your own legal fees and any damages awarded against you.

The money would probably have to come out of your business. If you are a sole trader, you would be left out of your pocket. It would also likely mean finding the time to deal with the claim, rather than taking on work.

In the end, it could cost you a great deal of money – and possibly your business.

Do I need public liability insurance?

If you or your employees come into contact with the public as part of your business, you should have public liability insurance. There may not be a law that says you must have it, but there are circumstances in which you do need it. Ignoring the risk is financially unwise.