What happens if you have no public liability insurance?

In this video, part of our Public Liability FAQ series, we answer the question ‘What happens if you have no public liability insurance?’.

Public liability insurance is not a legal requirement. However, having a policy will place you in a stronger position if a claim is brought against you. It may even save your business.

What does public liability insurance cover?

Public liability insurance protects your business against claims for damages or compensation from members of the public, who may have suffered injury, or damage to their property, because of your work.  Normally, public liability also covers legal fees. 

It is important to note that public liability insurance relates to injury or damage to members of the public, not employees.

Am I breaking the law if I don’t have it?

There is no law that requires your business to have public liability insurance. However, some large organisations require you to have it, and will not do business with you unless you are insured.

Am I in breach of contract if I don’t have public liability insurance?

This will depend on the terms of the contract. If your contract requires you to have it and you don’t, then you will be in breach of contract. This will be the case even if you had cover, but it has expired.

A contract will normally specify the level of cover you or your business needs. This will typically range from upwards of £1 million.

What happens if you are in breach of contract will also depend on the circumstances and terms of the contract. The other party may be entitled to terminate the contract, and possibly bring a claim for damages against you.

What happens if someone brings a claim for damages or personal injury?

This may depend on whether your business operates as a limited company or you are a self-employed sole trader.

First, you will be contacted either by the claimant (or their solicitor) or by the court to let you know a claim has been filed.

At this stage, while you don’t have to use a solicitor, we strongly recommend that you do. They can advise you on what you need to do in response, and what the likely outcome of the claim will be.

Usually, you will either admit the claim or file a defence.

Court proceedings are notoriously slow and can take months to resolve. A solicitor may deal with some of the pre-trial court appearances and administration. However, if you don’t have a solicitor you will have to do this yourself.

If the case goes to trial, you will need to take time off work to attend. It’s not hard to see how a claim may mean you up spending a lot of time and money dealing with legal proceedings, rather than focusing on your business.

What happens if the claimant is successful?

If you lose or admit the claim, the court will order you to pay compensation or damages to the claimant. The exact amount will be calculated by the court.

A claim could range from a few hundred pounds to hundreds of thousands of pounds, depending on the nature of the incident. You will also have to pay court fees, medical expenses, and legal costs to all parties involved.

If you are operating as a limited company, your business will be responsible for paying these. If you are self-employed, you will be responsible for paying them.

If the claim is unsuccessful, you may be able to claim back your costs and losses, but this is not guaranteed.

What happens when you have public liability insurance?

All you will need to do is notify your insurer when you receive notice that a claim has been made. They will tell you what information they need and instruct a solicitor to deal with the matter on your behalf. The court fees, legal costs and any order for damages and compensation will normally be covered by your insurance.