When looking at getting a business insurance quote, there are three types of liability cover that should be included, employers, public and products liability. You can get other types of liability insurance, but these three are the main ones available in the UK.
If you are just starting out in business, you may be looking for a quote and may wonder exactly what cover you need compared to cover that you must have. The must have category is employers liability, unless of course you do not have any employees. This may seem simple enough but please be aware that the definition of employee is very, very wide. This is deliberate in that insurers are no able to not pay out on a claim due to minutiae in the policy wording about what is and what is not an employee. There will of course be people that are not employees, such as third party contractors or bona-fide sub contractors, but in the main anyone that is working, “under your direction”, for you is deemed to be an employee. This can include work experience persons, people under short term contracts and even friends and family working for you on a short term basis.
The insurance industry is sometimes accused of scaremongering. What we like to do though is to simply let you know of the potential for a claim. Under employers liability we have seen, over the years, a few claims paid where there is such a tenuous link between the “employer” and “emploee” that it is always worth getting cover.
The law of the land says that you must have employers liability insurance cover with a minimum limit of indemnity of £5,000,000. Most of the commercial insurance companies will provide a limit of £10,000,000. If you are in any doubt as to what constitutes an employee, as it relates to your business, please speak to your accountant or even the Inland Revenue. You may be surprised at how wide the definition of an employee can be.
Now we come to the others, public and products. These two covers are not legally required, although you may find that many contracts (eg if you are working for a local authority) have clauses in insisting that you have cover in place. Public liability is if you cause any injury, illness, disease or damage on the course of your work. The roofer dropping a tile on someone’s car, someone slipping on water on the floor from a cleaners mop and someone tripping over a loose carpet in your shop are all examples of public liability claims we have seen on policies. The person tripping on the carpet would have put some of the most prolific divers on our football grounds to shame with the “injuries” they suffered and the money they actually received.
Products liability insurance goes hand in hand with public and covers any illness, injury, disease or damage caused by products you supply or manufacture. Again, there is no legal requirement for this, but you may be required to prove that you have cover in place.
Whilst we say that public and products liability are not legally required, please note that this is not to say that it is cover that a sensible and prudent business should ever go without. The problem with liability claims is that they are “once in a blue moon” events. But, when they do get to claim stage the costs are never small.
Many insurers will offer a separate combined liability insurance policy, giving these three covers together under one policy. As with every blog we have ever written or will write, you really do need to speak to an independent business insurance broker to get the best help and advice.

