Public Liability and Employer’s Liability – What’s The Difference?

Liability insurance can protect your business from a range of costly claims. Many different types of liability insurance are available, but you are required by law to have certain forms of liability cover in place.

In this post we will take a look at two types of liability cover: Public liability insurance, and Employer’s Liability insurance. We will outline what each type of policy covers, before exploring the key differences between the two.

What is Public Liability Insurance?

If a third party  has an accident or injury on your business premises – whether they are a client, a customer, a visitor, a delivery driver, or a contractor – then they may make a claim against you.

In this case, public liability insurance may cover legal defence costs  that may arise, along with any compensation payments that may be due subject to the policy terms and conditions.

Public liability insurance can also respond to claims arising from accidental damage to third party  property. So, if you accidentally spill a cup of coffee over a visiting client’s laptop, for example, your public liability insurance may  cover  required repairs or replacements where cover applies.

Many public liability insurance policies will usually cover you for incidents that happen off-site, too, for example iff you accidentally damage a client’s property during a site visit subject to the policy terms & conditions.

What is Employer’s Liability Insurance?

While Public Liability insurance covers injuries or damages experienced by third parties, employer’s liability insurance covers accidents, injuries, or illnesses your employees may sustain while working for you.

The cover will also extend to other indivdiuals  for whom your business is responsible, such as  volunteers and trainees, subject to the policy terms and conditions.

An employer’s liability insurance policy will usually continue to provide cover for employees who no longer work for you. For example, your policy may cover your legal fees and compensation payments should some ex-employees develop long-term health conditions some years after leaving your business.

What is the Difference Between Public Liability and Employer’s Liability Insurance?

Both Public Liability insurance and Employer’s Liability insurance cover you for accidental damage and injury. But there are some key differences between the two policies:

• Public liability insurance – This will cover your legal liability for accidental injury to third parties or damage to third party property arising from your business activities It should typically cover you for incidents that occur at your premises or whilst carrying our business activities elsewhere.
• Employer’s liability insurance – This covers your legal liability for injury, illness or disease sustained by employees arising out of and in the course of their employment. Depending on the policy wording, cover may also extend to other indivduals for whom your business owes a duty of care, such as interns, volunteers, trainees, and temps.

What Insurance Does Your Business Need By Law?

Employers Liability Insurnace: If you employ any staff, you may be  legally required to have Employer’s Liability insurance. The Health and Safety Executive (HSE) has certain enforcement powers, and may impose certain penalties if a business fails to comply with its Employer’s Liability insurance obligations. This can include:

• A fine of £2,500 per day, for every day your business operates without the required cover.
• An additional fine of £1,000 if you are unable to present a valid liability insurance certificate when requested.

The HSE can impose these penalties regardless of whether or not an incident has taken place.

Public Liability Insurance: There is generally no legal requirement to purchase Public Liability insurance.  However, it is an important form of protection for two key reasons:

1. Without Public Liability cover your business could be liable for legal defence costs , compensation awards and other associated expenses arising from claims for injury to third parties or damage to third party  property resulting from your business activities.
2. Certain clients, local authorities and other commercial organisations may require you to have a Public Liability policy in place as part of a contractual agreement. They may even require you to supply a certificate of public liability cover before they agree to work with you.

Protect Your Business With Insurance Arranaged by  James Hallam

James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who are committed to protecting your business.

We can help you arrange  the liability insurance cover your business needs, providing protection against  potential claims, whether they come from employees, customers, or other third parties , subject to policy terms, conditions and exclusions.

Get in touch for a free quote today.