Imagine you run a business, and you meet hundreds of people every week. Clients, employees, general public. In such a scenario an incident happens that harms the property of your client or physically injures them and you’re thrown a lawsuit at your desk.
Whether it is your fault or not, you have been subpoenaed. Now, maybe your business earns enough that you can hire a lawyer, but maybe you can’t. And what about all the other legal costs that will come knocking at your fancy glass door?
Even if you can afford it, you don’t want to. Who likes hundreds and maybe thousands of dollars paid out of their pocket for court games? This is why you need public liability insurance.
Table of Contents
- 1 What is the purpose of public liability insurance and what is it?
- 2 What does Public Liability Insurance Cover
- 3 How much is Public Liability Insurance?
- 4 Small Business Claims with Average Cost of Insurance
- 5 Average Cost of Insurance Industry Wise
- 6 What is Public Liability Insurance Certificate
- 7 Where to get Public Liability Insurance?
What is the purpose of public liability insurance and what is it?
In very simple words, public liability insurance gives financial protection to you or your business if you are held responsible for damaging property or giving injuries to a client, contractor or any member of the general public.
Imagine if you are visiting a client and you accidentally break an important asset, or maybe you spill water on their laptop. You’ve ruined their property, and the client could sue you because their laptop had important documents stored. Now you have to face all the legal costs and hassle of being charged, but the insurance company, under the public liability insurance will cover you.
In some states it isn’t a legal requirement for you to have public liability insurance, but it is a good idea to have one. Even if you think you are careful enough and your business wouldn’t harm anyone else, bad days come unannounced. Any day that you wake up you could have a brown envelope sitting on your desk and you will have to get around to it.
What does Public Liability Insurance Cover
There are only three types of incidents that a public liability insurance will cover:
- Damage to property
- Injury to the general public
- Legal expenses
If any activity of negligence has been conducted by you or your company and has in turn affected the wellbeing of the general public, you will be ordered by the court to compensate. And you may not have the resources to do so. So a public liability insurance will cover you.
This policy doesn’t cover any damages or losses incurred to your business, like if an asset of your company gets stolen or your property damaged, the insurance company will not cover it from this policy.
Furthermore this policy will also NOT cover the allegations brought forward by employees. For instance if an employee injures him while at work, or if he gets into an accident while delivering work files to a client, he will not be medically or financially covered under this policy. The Employer’s Liability Insurance covers all liability that is done to the employees.
How much is Public Liability Insurance?
It really depends how much the cost of public liability insurance is, especially if you look at it from an industrial point of view. We’ll get the quotes for it later on.
Here are the average cost of insurance quotes for a small business.
Small Business Claims with Average Cost of Insurance
|Claim Type||Percentage of Small Business Claims||Average Claim Cost||Covered by Public Liability|
|Customer Injury and Damage||Less than 5%||$20,000||Depending on location|
|Reputation Harm (Personal Injury)||Less than 5%||$50,000||X|
Average Cost of Insurance Industry Wise
|Industry Type||Average Cost Per Year|
|Janitors & Maids||$730|
Note: Sample quotes have been extracted online, courtesy of FitSmallBusiness.
As you can see above, industries like retail and accounting have low cost of insurance because the risk of hazards is relatively less. For contractor business and real estate the risk of public property damage and bodily injury is more which is why the average cost is also high.
What is Public Liability Insurance Certificate
A public liability insurance certificate is basically a legal document that provides proof that your business is covered by insurance, should any unfortunate incident happen.
This gives the peace of mind to you and your customers that in case something did happen, the cost will be easily beared and the matter will be handled properly. Even though it isn’t necessary for you to display it, if you do, your clients can see it as you being responsible and careful about the situation.
This certificate basically outlines the basics of your policy and provides you with a written proof of your compensation.
Where to get Public Liability Insurance?
Public liability insurance isn’t all that a business may need protection for. They might also need employer’s liability insurance to protect their employees against any mishaps, so the best way of getting public liability insurance is to shop around.
There are many companies who offer insurance programs and sometimes offer multiple ones, so you may get a discount on each policy. All you have to do is shop around and look for the best rates possible with policies that suit your needs.
If you go for high coverage programs, you will have to pay a higher amount of premiums. If the nature of your business inites relatively lower risk than other industries, there is no point in you opting for a high coverage program because you will have to pay higher premiums then.
Even though the State doesn’t legally require you to have public liability insurance, it is always a better idea to get one. Unexpected costs can actually shake your monthly or annual budget, and if you’re a small business you may not be able to recover from that. It is definitely a smart move to have an insurance company cover with all these legal costs and issues.