What is public liability insurance?

Putting the question into context

The policy needs to match the work as it is really done. A tidy trade name on its own does not tell an insurer enough.

Cover applies within the stated dates, activities, limits and conditions. That sounds plain, but it is where many misunderstandings begin.

The day-to-day exposure is easier to judge through examples. For this subject, look at: a customer trips over your equipment; you damage a client’s floor while working; and a passer-by is hurt near your work area. Each example can involve different facts and exclusions. Mention it if it forms part of the work you undertake.

Do not rely on memory if you can check: your exact trade and all the jobs you take on; where you work and whether the public can enter; and turnover, experience and any previous claims. Read the answer back as though you were checking somebody else’s form.

Set the certificate beside the full policy documents. The certificate confirms useful basics, but it cannot show every condition. An unexplained clause is a reason to ask a question, not to guess.

Where the exposure comes from

The following examples are worth discussing if they occur in your work:

• A customer trips over your equipment
• You damage a client’s floor while working
• A passer-by is hurt near your work area

The cause, timing and people involved can all change the outcome. Keep that in mind when reading the wording.

Think about a recent job where “you damage a client’s floor while working” might have arisen. The customer, premises and method of work are often more informative than the occupation name alone.

The point about “a passer-by is hurt near your work area” may follow a different policy route. Check it rather than assuming that every loss connected with the business belongs under public liability.

Read the proposed wording against those real examples. Query a gap before accepting the cover.

What to check before starting the form

A hurried estimate can cause confusion later. Check:

• Your exact trade and all the jobs you take on
• Where you work and whether the public can enter
• Turnover, experience and any previous claims

Set aside a few minutes for “your exact trade and all the jobs you take on”, “where you work and whether the public can enter” and “turnover, experience and any previous claims”. Accurate answers now make it easier to check the schedule and business description when the documents arrive.

A customer may later read only the certificate. You should still keep the fuller schedule and endorsements for your own records.

Two reminders from this page are “injury and property-damage limits” and “legal defence costs and whether they sit inside or outside the limit”; keep them beside the documents when you check the quotation. If the policy takes a different approach to “your exact trade and all the jobs you take on”, ask about it before the cover is needed and retain any written reply.

If the provider asks for an estimate, make a fair one and note how you arrived at it.

Do not skip the endorsements

• Injury and property-damage limits
• Legal defence costs and whether they sit inside or outside the limit
• Exclusions for the part of property you are working on

Pay attention to instructions that use words such as “must” or “always”. Ask what happens if a condition cannot be followed on a particular job.

Before you submit the quote

Read a recent contract and compare its insurance clause with the limit and business description you plan to buy.

A short written record can save a long disagreement about what was said when the cover was arranged.

Do not discard the earlier policy when a new one begins. A claim can arrive well after the work was completed, so the documents in force at the time may still be needed.

Do not let the following point get buried: exclusions for the part of property you are working on; check how this affects the jobs you accept and ask for clarification if the policy takes a different approach.