Do I need public liability insurance as a sole trader?

As a sole trader, you have plenty of responsibilities for your business. One of these is to ensure you have the right insurance.

If you’re the only employee, you’re not legally required to have any cover. So would something like public liability insurance benefit you, or is it an avoidable cost?

This guide answers your question, “do I need public liability insurance as a sole trader?” and the following:

• What is public liability insurance?
• Do I need public liability insurance as a sole trader?
• When should I take out insurance?

Public liability insurance is a cover that can help you pay for court fees and compensation for two types of claims:

• Public injury — someone gets hurt on your premises or due to your operations.
• Public damage — other people’s property is negatively affected by your premises or operations.

So these are the two main scenarios, think about what would happen to your business if it faces legal trouble.

The costs of any claims from the public could bankrupt your business. With insurance cover in place, the provider will pay those costs up to a specific amount depending on the protection.

Whether you need that cover depends on if those scenarios relate to your business and how likely you are to face them.

To give you a better idea of how these incidents happen, let’s look at it from different job perspectives.

For example, you’re a dog walker and one of the dogs bites a public member. It might be a new pup and you’re unfamiliar with its behaviour. A simple walk could quickly turn into a nightmare, which leads someone to file a claim.

Another example is if you’re a plumber. You could turn the wrong pipe and flood part of a customer’s house, damaging possessions. An accident could quickly lead to legal action.

Even as a personal trainer, a client can injure themselves on a treadmill. They could slip on the treadmill or pull a muscle while lifting weights. There are always scenarios where things could go wrong.

Ultimately, it’s up to the individual if their injuries,  illnesses or damages are enough to take you to court. People could aim to benefit from the situation through a payout or genuinely need the money if they lose work.

Regardless of claimant intentions, it’s an issue for you if it relates to your property or business operations. Even if you create the safest environment, accidents can always happen.

You should probably consider public liability insurance if you work from premises like a shop or warehouse.

Customers expect to receive what you sell without any harm. But what kind of premises are more likely to see injuries?

You might not think a shoe shop could be as dangerous as a tattoo parlour, for example. But in reality, health and safety would be a priority of a service like tattooing.

On the flip side, you may be less prepared to look out for potential hazards in a shoe store. 

In reality, there are no exceptionally safe or dangerous premises because they all carry their own risks.

If your operation engages with the public, it might influence you when you decide whether you need public liability insurance as a sole trader.

You might find that you work in an industry in which your customers want you to have public liability insurance. For contractors, in particular, it reassures people you’re a professional that’s prepared in case of an accident.

That means your customers will have the peace of mind that you’re able to pay for any damages to their property and won’t leave them with a massive bill.

Ultimately, most business decisions come down to cost. Consider the difference in the amount you spend on the cover or a payout for injuries and damage.

For example, you might need to hire a lawyer to deal with a claim against you. The UK average cost for lawyers per hour depends on their experience:

• £111 –– junior
• £180 –– over 4 years
• £210 –– over 8 years

Your lawyer may require you to pay them to work before you get to court. When you get there, a UK average day in court costs £2,692.

Public liability insurance is always available regardless of the stage your business is in. But you might benefit from reassessing if you need it regularly, it might depend on any plans to change the business operation.

Although, when it comes to new developments, it’s also important to update your insurer to make sure your cover is relevant. For example, if you move to a new property.

Another crucial point is that you can’t take out cover retrospectively after someone takes action against you. You need to be prepared ahead of time if you want an insurer to support you in that case.

If you decide you need it, Superscript offers public liability insurance from £5 a month, and you can get a quote to suit your specific needs. 50% of their customers pay less than £10 a month for their cover.

Whether you use public liability insurance or not, costs are inevitable. Either you pay for the cover monthly, or potentially legal costs without it. 

In your day-to-day business, though, you also have to keep an eye on your spending. That could be things like supplies, utilities and marketing.

Countingup is a business account with built-in accounting software to make your financial management accessible. 

Its expense categorisation feature can automatically sort your costs conveniently with HMRC approved labels through your phone.

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