Public Liability Insurance (PLI) is often seen by businesses as an expensive but necessary element of their business insurance portfolio. But does your business really need PLI or are you just wasting your money? After all, PLI is not a legal requirement for businesses.
Before addressing the question, it's important to clarify what PLI actually covers:
- Injury to third parties as a direct result of your business operations
- Damage to a third party's property as a direct result of your business operations
Should either of these events occur with the result that your business is sued for damages, PLI will cover you for the cost of any legal fees and compensation awards made against you.
What types of businesses need PLI?
If your business involves carrying out work on clients' property, such as electrical repairs, building work or decorating for example, you will probably find that most of your clients will expect you to have an element of PLI in place before they will employ you. This gives them the peace of mind that, should their property be damaged accidentally or as a result of your negligence, they will have financial redress against you.
It's recommended that you have a fairly sizable element of PLI cover in place if you run a contracting business, as the risk of a claim is potentially quite high. Telling prospective clients that you have PLI cover also gives an impression of professionalism and integrity, which is all-important when trying to secure new business.
Public facing companies
Businesses that work directly with the public, like hotels, restaurants or shops for example, really must have PLI cover. Sheer weight of numbers passing through your business premises on a daily basis dictates that one day someone will have an accident, and you may find yourself on the wrong end of a potentially bankrupting legal action if you're not covered.
If you run an office-based business which has no direct interaction with the public, you might think that PLI is not appropriate for you. However, most firms have third party visitors from time to time in the form of sales reps, suppliers or delivery people. Any of these people could suffer an accident whilst on your premises, so you should have a small amount of PLI cover in place, just in case.
If you run a small business from your home, you may not need PLI cover, unless you regularly have clients visiting you there or suppliers calling in. For example, a freelance writer who deals exclusively with clients online probably won't need PLI, whereas someone who runs a hypnotherapy clinic where clients call in daily for treatment will do.
PLI cover is something you should seriously consider including in your business insurance portfolio if you have any dealings with the public, third party suppliers or other visitors to your business premises. These days, no-win-no-fee public liability claims against businesses are very popular and having adequate PLI cover could save you and your business from facing serious financial problems in the event that a successful claim was made against you.
For your own peace of mind, it's well worth having a chat with your insurance broker such as Elders Insurance about including PLI in your business insurance cover.