What is public liability insurance & what does it cover?
Public liability insurance is a type of business insurance that covers you if a member of the public is injured or their property is damaged as a result of your work.
It helps pay for legal costs, compensation claims, and related expenses.
That’s the simple definition. But public liability insurance does far more than tick a box—it’s often the only thing standing between a small accident and a serious financial loss. Whether you’re a tradesperson, market stallholder, mobile beautician, or café owner, if your work brings you into contact with customers, passers-by, or anyone else’s property, you’re carrying risk every single day.
This guide breaks it all down. We’ll look at what public liability insurance actually covers, who it’s for, whether you’re legally required to have it, and how much protection you might need based on your work. You’ll also learn what it doesn’t cover—and how to avoid common mistakes that leave businesses exposed when they thought they were protected.
By the end, you’ll know whether public liability insurance is something you can afford to ignore—or something you can’t afford to be without.
What does public liability insurance cover?
Public liability insurance covers claims made by members of the public for injury or property damage caused by your business activities.
This includes legal fees, compensation payouts, and associated costs if someone holds you responsible.
For example, a client visiting your premises slips on a wet floor and breaks their wrist. Or a tradesperson accidentally cracks a customer’s expensive kitchen worktop during an installation. In both cases, you could be liable—and without insurance, you’d be footing the bill for legal defence and damages out of pocket.
Public liability policies typically include:
- Injuries to third parties—like customers, passers-by, or visitors
- Damage to third-party property caused during your work
- Legal expenses associated with defending a claim
- Compensation settlements if you’re found at fault
The exact wording varies between providers, but the principle is always the same: if someone outside your business is harmed as a result of what you do, this policy helps make things right—without wiping out your finances.
It’s not just for public-facing shops or cafés either. Even a home-based consultant who visits client offices could accidentally cause damage. If your work brings you into real-world contact with others, you’re exposed to risk—and this is what covers it.
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Get QuotesWho needs public liability insurance?
Any business or self-employed professional whose work involves contact with the public should consider public liability insurance.
If your job brings you into someone else’s home, workplace, event, or premises—even occasionally—you’re exposed to potential claims.
This includes an enormous range of industries and job types. Tradespeople like electricians, plumbers, and decorators often carry it as standard. So do hairdressers, beauticians, personal trainers, and mobile therapists. If you host clients in a studio, visit customer homes, run a market stall, manage public events, or operate any kind of retail space, you fall within the risk zone this insurance is designed to protect.
Even if your work seems low-risk, claims can come from unexpected places. A freelance photographer knocks over an antique lamp while setting up a tripod. A cleaner’s wet floor leads to a slip. A food van operator accidentally burns a customer. These aren’t edge cases—they’re regular occurrences that can trigger serious costs.
If you work alone, you might assume you’re safe. But public liability has nothing to do with how many employees you have. It’s about how your work interacts with the outside world. If that interaction exists—even if it’s minimal—you’re a candidate for this type of cover.
Related Read: Do I Need Public Liability Insurance?
Is public liability insurance a legal requirement?
No, public liability insurance is not legally required in the UK—but that doesn’t mean it isn’t essential.
Many businesses still need it to operate, because clients, venues, or local authorities often won’t work with you unless you have cover in place.
This distinction matters. There’s no government law that says you must have public liability insurance to trade. But in practice, it often becomes a requirement through contracts or access rules. For example, if you’re applying to exhibit at a market, carrying out work on council property, or submitting a tender for a public contract, you’ll almost certainly need to show proof of insurance before you’re accepted.
The same goes for private clients. A property management firm might insist that any contractors entering tenant homes hold at least £5 million in cover. A festival organiser could refuse to book your catering van unless you’re insured. It’s not about red tape—it’s about risk control.
So, while there’s no legal fine for not having public liability insurance, the real penalty could be lost opportunities. No cover can often mean no work.
How much public liability insurance do I need?
Most small businesses in the UK choose between £1 million and £5 million of public liability cover, depending on their trade, client contracts, and risk exposure.
But what you need depends on where and how you work—not just your business size.
If you’re a sole trader who rarely interacts with the public, £1 million might seem plenty. But if you’re bidding for work with local authorities, managing public events, or working in schools, you’ll often be required to carry £5 million—or even £10 million—just to qualify.
It’s not about how big your business is. It’s about the size of the risk others believe you carry.
Here’s a simple guide:
- £1 million: Suitable for low-risk, one-person businesses working mostly from home or online.
- £2 million: A common middle ground for trades, mobile professionals, and public-facing services.
- £5 million: Often required for council work, construction sites, or contracts involving public venues.
- £10 million: Typically requested for large-scale projects, event management, or subcontracting under big firms.
If you’re unsure, start by reviewing any client contracts or tender criteria. If none exist, think about what a worst-case claim might cost—not just compensation, but legal fees and reputational fallout. Then pick a level that protects you from that kind of hit.
How much does public liability insurance cost?
Most small businesses in the UK pay between £50 and £250 per year for public liability insurance, depending on their trade, level of cover, and risk exposure.
But those figures can stretch much further either side based on what you do—and where you do it.
For example, a domestic cleaner with minimal public interaction might pay just over £50 a year for £1 million in cover. A market stallholder serving food in a public square could pay three to four times that. Builders and tradespeople working on high-value properties or public sites may face premiums of £226 or more—even for the same £2 million cover.
Cost is influenced by several key factors:
- Your trade and risk profile
- The amount of cover you choose (£1M, £2M, £5M, £10M)
- Whether you employ others
- Previous claims history
- Location and public footfall
Insurers also assess how frequently you work in public-facing environments and whether client contracts demand higher cover. Even if you’re a sole trader, premiums aren’t automatically cheap—especially if your line of work involves manual labour, machinery, or mobile operations.
If you want a full breakdown by trade, turnover, and cover level, visit our in-depth guide: How Much Does Public Liability Insurance Cost in the UK?
What doesn’t public liability insurance cover?
Public liability insurance doesn’t cover injuries to your employees, damage to your own property, or claims arising from poor advice or workmanship.
It’s designed to protect against third-party injury or damage only—nothing else.
That means if a staff member is injured while working for you, that’s a job for employers’ liability insurance. If you accidentally damage your own tools or equipment, you’ll need separate cover—usually business contents or tool insurance. And if a client sues you for bad advice or professional negligence, it’s professional indemnity insurance that responds—not public liability.
Another common misunderstanding is that public liability covers every possible incident at your workplace. It doesn’t. For example, it typically won’t cover:
- Contractual disputes
- Faulty workmanship claims
- Product liability unless explicitly included
- Gradual pollution or asbestos-related harm
- Incidents involving vehicles (usually covered by motor insurance)
Every policy has its limits. And while some of these exclusions can be covered with add-ons or separate policies, the key is knowing what’s not included upfront. That way, you’re not left exposed by gaps you assumed were already covered.
Final thoughts
Public liability insurance might not be a legal requirement, but for most businesses, it’s a practical necessity. Whether you’re a sole trader with a handful of regular clients or a growing team working on public contracts, the risk of causing injury or damage is ever-present—and the financial fallout from a single claim can be serious.
It’s not about being careless. It’s about being prepared. A trip hazard, a dropped tool, a momentary oversight—these are all it takes for a third party to suffer a loss and hold you accountable.
Getting the right policy isn’t complicated. It starts by understanding what the cover does, who it protects, what it doesn’t include, and how much you realistically need. From there, it’s about finding a provider who sees your business the way you do—not as a number, but as something worth protecting properly.
If your work brings you into contact with people or property you don’t employ or own, public liability insurance isn’t just sensible. It’s part of doing business responsibly.
Frequently Asked Questions (FAQs)
Yes, short-term public liability insurance is available—typically for events, exhibitions, or one-off jobs. Cover durations can range from a single day to a few weeks.
Yes, public liability insurance is generally classed as an allowable business expense by HMRC and can be deducted from your taxable profits.
Absolutely. VAT registration is not a requirement for cover. Many sole traders and freelancers without VAT registration still hold valid public liability policies.
If someone makes a claim and you’re uninsured, you’ll be personally liable for legal fees, compensation, and any court-ordered costs—potentially running into thousands.
Yes, but you may pay more. Insurers assess your claims history when pricing your policy. Some specialist providers cater to higher-risk profiles.
No, damage or theft of your own tools isn’t covered. You’ll need business contents or tools insurance to protect your own equipment.
Possibly. If clients visit your home or you carry out work at other people’s properties, you still face public risk. It’s worth considering.
No. Public liability covers physical injury or property damage. Professional indemnity deals with financial loss caused by poor advice or negligence.