In the UK, small businesses make up over 99% of all private sector organisations. While this segment drives economic growth, it also faces a range of operational risks.
One of the most pressing challenges for small businesses is handling claims made by members of the public who suffer injury or property damage as a result of the business’s activities.
According to data from the Association of British Insurers (ABI), over £22 million is paid out daily in liability claims. With such large sums in question, failing to have the right insurance in place can have catastrophic consequences.
This raises an important question: Are you adequately covered, and are you getting the best value for that protection?
This guide explores how to compare public liability insurance for small business in the UK, helping you understand coverage, costs, and key features so that you can make informed decisions that benefit your bottom line.
What Is Public Liability Insurance for Small Businesses in the UK?
Public liability insurance is a form of business insurance that covers legal costs and compensation payments if a third party, such as a client, customer, supplier, or passer-by—suffers injury or property damage due to your business activities.
Whether you operate from a high street shop, provide services on client premises, or even work from home but have visitors, this cover is essential.
It typically protects businesses from:
- Compensation claims from third parties
- Legal defence costs in case of litigation
- Medical bills incurred by the injured party
- Costs of repairing or replacing damaged property
Unlike employers’ liability insurance, public liability insurance is not legally required. However, it is often considered essential by business owners, especially those working in public spaces or offering services at client sites.
Many clients and local authorities also demand proof of cover before agreeing to work with a business. For tradespeople, venue operators, and event organisers, this insurance can be the difference between landing a contract or being turned away.
Why Is Public Liability Insurance Essential for UK Small Business Owners?
Accidents can happen in any business, no matter how careful you are. If someone is injured or suffers a loss as a result of your services, you could be held legally responsible.
The resulting costs can run into thousands, sometimes millions, of pounds, depending on the severity of the claim.
Even small incidents, like a slip on a wet floor or a broken window caused by equipment, can escalate quickly. Public liability insurance ensures that your business can handle these claims without severe financial disruption.
For businesses involved in government or local council projects, public liability insurance is usually non-negotiable. It may also be required for participation in trade shows, exhibitions, or when renting commercial premises.
Business Scenarios Where Cover Is Beneficial:
- A builder’s scaffold collapses, damaging a car parked below.
- A caterer serves contaminated food at an event, causing food poisoning.
- A hairdresser’s customer trips on loose cabling and sustains an injury.
- A window cleaner’s bucket falls and damages a pedestrian’s mobile phone.
Such events can occur with minimal warning, and without insurance, the legal and compensation costs would fall entirely on the business owner.
What Should Small Businesses Consider Before Comparing Business Insurance Providers?
When shopping for public liability insurance, it’s important to assess your business’s specific needs and risk exposure. Not all businesses face the same risks, so insurers calculate premiums based on several variables.
Key considerations include:
- Business structure: Sole traders may need lower cover than a limited company with employees and multiple public-facing roles.
- Nature of your services: Manual labour and trades usually carry more risk than consultancy or admin-based work.
- Level of public interaction: The more contact you have with the public, the higher the likelihood of a claim.
- Client or contract requirements: Government contracts, landlords, and event organisers often set minimum cover levels.
- Previous claims history: Businesses with a history of claims may see higher premiums.
What Features Should You Look For in a Public Liability Insurance Policy?
Choosing the right public liability policy is not just about finding the lowest price. You need to ensure the policy offers the right level of cover and includes essential features that protect your business in real-life scenarios.
Commonly Included Features
| Feature | Description |
| Compensation payouts | Covers payment if you’re found liable for injury or damage |
| Legal fees | Includes the costs of defending your business against a claim |
| NHS recovery charges | If emergency services are called, the NHS can seek reimbursement |
| Property repair or replacement | Pays for repairs to third-party property damaged by your business |
| Court attendance costs | Covers expenses for attending legal proceedings related to a claim |
Common Exclusions
| Not Covered | Explanation |
| Your own injuries | Covered under personal accident or business health insurance |
| Damage to your property | Requires separate contents or commercial buildings insurance |
| Employee injuries | Requires employers’ liability insurance (a legal requirement in most cases) |
| Deliberate or illegal acts | Claims due to intentional harm or criminal activity are excluded |
| Professional errors | Covered by professional indemnity insurance |
How Can You Effectively Compare Public Liability Insurance for Small Businesses?
To make an informed decision, you’ll need to evaluate more than just the monthly premium. You should also assess coverage limits, exclusions, and service quality.
There are three main ways to compare:
- Comparison websites: Platforms like MoneySuperMarket, GoCompare, and Simply Business offer side-by-side comparisons.
- Direct quotes: Some insurers like Direct Line offer competitive rates not available through comparison tools.
- Insurance brokers: Ideal for businesses with unique or high-risk operations.
When comparing policies, request documents such as the policy schedule and insurance summary to review coverage in detail.
Which UK Public Liability Insurance Providers Offer the Best Value?
Below is an updated comparison table of leading providers offering public liability insurance in the UK:
| Provider | Starting Cost (Monthly) | Max Coverage Limit | Unique Benefits | Suitable For |
| AXA | £12 | £5 million | Fast online quotes, flexible cover | Sole traders, startups |
| Hiscox | £15 | £10 million | Customised policies | Creative businesses, freelancers |
| Direct Line | £18 | £5 million | UK-based call centres, no broker fees | Retailers, salons |
| Zurich | £16 | £10 million | Legal helpline, tailored risk advice | Medium to large businesses |
| Simply Business | Varies | Depends on insurer | Broker network access | Niche and high-risk industries |
How Much Does Public Liability Insurance Cost Small Businesses in the UK?
Costs can vary widely depending on your sector, size, and risk profile. Below are average annual premiums by profession.
Average Annual Premium by Profession
| Profession | Average Annual Cost |
| Builder | £168.24 |
| Roofer | £305.10 |
| Painter/Decorator | £87.54 |
| Electrician | £88.30 |
| Caterer | £135.66 |
| Plumber | £102.50 |
| Retailer | £93.75 |
Several factors influence the price you’ll pay:
- Business turnover
- Previous claims history
- Chosen excess amount
- Work environment risks
- Geographical location
It’s worth noting that 10% of policyholders paid as little as £4.63 per month, according to Simply Business. However, businesses in higher-risk sectors will typically pay more.
What’s the Difference Between Public Liability and Professional Indemnity Insurance?
These two insurances serve different purposes and protect against different risks.
Comparison of Policy Types
| Type of Cover | Public Liability | Professional Indemnity |
| Covers | Injury or property damage to third parties | Professional errors, omissions, or advice |
| Best For | Retailers, trades, and event organisers | Consultants, designers, accountants |
| Required By | Clients, landlords, and local councils | Clients, especially in contract-based industries |
| Legal Requirement? | No | No |
Why Should UK Small Businesses Compare Public Liability Insurance Regularly?
Over time, your business may grow, change direction, or offer new services. The insurance you purchased a year ago might no longer provide adequate protection. Renewing without comparing could mean missing out on better rates or more suitable coverage.
Reasons to compare annually include:
- Premium increases at renewal
- Launch of new products or services
- Changes in staff numbers or turnover
- Updates in legislation or client requirements
Even a slight adjustment in your cover could lead to significant savings or better protection.
FAQs
Is public liability insurance legally required in the UK?
No, but it is strongly recommended. Certain contracts or clients may require it.
How much public liability cover do I need?
Most small businesses opt for £2 million cover. Higher-risk businesses or those working with government contracts may need up to £10 million.
What’s an insurance excess and how does it work?
It’s the amount you agree to pay toward a claim. A higher excess usually lowers your premium.
Does public liability insurance cover staff?
No, that’s what employers’ liability insurance is for, and it’s a legal requirement if you employ anyone.
Can I get cover as a self-employed freelancer?
Yes, many policies are tailored to sole traders and freelancers with flexible pricing.
How do I file a public liability claim?
Notify your insurer immediately, provide supporting evidence, and cooperate with their investigation process.
What other types of business insurance should I consider?
You might also need employers’ liability, professional indemnity, product liability, cyber liability, and contents or tools insurance.
