Public liability insurance: what UK businesses need to know

Public liability insurance (PLI) protects your business if a third party is injured or their property is damaged because of your work. It covers compensation payouts and legal costs arising from claims made by customers, visitors or members of the public. PLI is essential for any business that interacts with people or carries out work on client premises, providing financial protection when accidents occur.

Public liability risks are common across the UK. While total claims reached a low of 51,286 during the pandemic, they have been steadily rising every year since. In 2024/25, total public liability claims were 64,423, up from 58,933 in 2023/24. Slips and trips at your premises, accidental damage during site work and incidents at events can all lead to significant claims. 

Public liability insurance for small businesses is especially important, as cover is affordable and helps protect against the high costs that even a single claim can create. This guide breaks down what public liability insurance covers, what it excludes, typical costs, and how your business can choose the right level of protection.

Public liability insurance UK - A short summary

Here is a snapshot of what PLI provides for your business and the key conditions to be aware of.

• Protects against third-party claims

Covers injury or property damage to members of the public caused by your work or business activities.

• Not legally required but often contractually mandatory

PLI is not required by UK law, although many landlords, venues, local authorities and contractors ask for proof of cover before granting site access or awarding contracts.

• Average cost for small businesses

Public liability insurance for small business costs an average of £118 per year, although premiums vary based on trade risk, turnover and your claims history. Many small and micro businesses pay less than £87 per year.

• Common coverage limits

Limits typically range from £1 million to £10 million. Small-venue contracts often require cover of around £2 million, while many public or construction sector contracts insist on £5 million or more.

• Covers legal defence costs

Includes both claimant legal costs and your own defence expenses. These costs can reach thousands of pounds even when a claim is withdrawn or unsuccessful.

• Excludes employee injuries

Employee injury claims aren’t covered. Employers’ liability insurance is separate and legally required if you employ staff, with fines of £2,500 per day for non-compliance.

• Professional advice needs separate cover

Claims arising from design work, consultancy or professional advice require professional indemnity insurance, which protects against errors or omissions.

• Essential for high-risk trades

Trades such as roofing, construction and work at height typically pay higher premiums but also face greater exposure to serious third-party injury claims.

With the right PLI in place, you protect your business from the possibility of costly claims and meet requirements to secure contracts and win work.

What is public liability insurance and why is it important?

Public liability insurance protects your business when a member of the public suffers injury or property damage because of your work. It covers compensation awards, claimant legal costs and your own defence expenses when someone makes a claim against your business.

Typical claim scenarios include the following.

• Customers slipping or tripping at your premises
  
• Accidental damage caused during site work
  
• Injuries linked to equipment at events or markets
  
• Products causing harm to buyers

These routine situations can lead to substantial claims that place pressure on business finances. This is where PLI comes in, acting to safeguard both your cash flow and your ability to win work. 

Many landlords, venues, local authorities and principal contractors require proof of cover before allowing access to premises or awarding contracts. Without adequate protection, a single claim can be financially damaging, even when the incident is minor.

If you need higher limits for a new contract or must pay annual premiums upfront, iwoca’s flexible business loans can help with the cost. You can borrow what you need, repay early with no fees and only pay interest for the time you use the funds.

Who needs public liability insurance in the UK?

Public liability insurance is important for any business that interacts with the public or works on client premises. The most common types of business with PLI cover include the following.

• Shops and cafés
  
• Trades and home-visit services
  
• Market stalls and pop-up retailers
  
• Studios and workshops
  
• Mobile services
  
• Event and market traders

Sole traders and freelancers working in client homes, offices or public spaces also need protection, since their work may create third-party risks that can lead to costly claims.

Contractors and subcontractors often must hold set minimum limits under contract or site rules. Construction and local authority sites commonly require between £2 million and £5 million of public liability cover before allowing access or awarding work.

What does public liability insurance cover?

Public liability insurance covers compensation and legal costs when a third party suffers injury or property damage because of your work. It applies to incidents at your premises, at client sites or at events, during deliveries to customer locations, or while carrying out work in public spaces. Most UK policies cover domestic operations, with some offering extensions for overseas work depending on the wording.

Third-party injury and property damage

Your policy pays compensation if a member of the public is injured or their property is damaged due to your business activities. This includes accidents on your premises, damage caused during site work and incidents at markets or events.

Claimant legal costs and your defence expenses

Public liability insurance pays the claimant’s legal costs if you’re found liable and covers your own defence costs, including solicitor fees and court expenses. Also, it’s important to note that even when you successfully defend a claim, legal costs can be significant.

Standard exclusions to check

Public liability insurance doesn’t cover every circumstance. Common exclusions include the following scenarios.

• Employee injuries or illness
  Covered separately under Employers’ Liability insurance
  
• Professional advice or design work
  Requires Professional Indemnity insurance
  
• Deliberate or reckless acts
  Not insured under any public liability policy
  
• Defective workmanship
  Fixing poor workmanship is excluded, though resulting damage may be covered
  
• Contractual liability
  Extra obligations accepted under a contract aren’t covered
  
• High-risk activities
  Certain hazardous tasks or locations need approval or specialist cover

Does public liability insurance cover employees?

No. Public liability insurance doesn’t cover employees. Injuries or illnesses affecting employees, volunteers, trainees or many labour-only subcontractors fall under Employers’ Liability insurance, which is a legal requirement if you employ staff. 

Public liability insurance covers claims from people outside your employment, such as customers, clients, visitors and the general public.

How much does public liability insurance cost?

Public liability insurance costs vary widely across the UK, and your trade, turnover and claims history all influence what you pay. In 2025, many small businesses were quoted £86.77 for annual public liability cover. More broadly, across “dozens of types of businesses and occupations”, the average premium is £114 per year or £14.30 per month. Your costs will depend on your specific business circumstances.

The cost of public liability insurance is shaped by the following core factors.

Trade risk
Higher-risk trades such as roofing, construction and work at height pay more than lower-risk services like consulting or photography.

Turnover
Higher annual revenue often indicates larger contracts and higher potential claim values.

Claims history
Previous claims increase premiums for several years, while a clean record helps reduce costs.

Location
Urban or high foot-traffic areas cost more to insure because exposure to third-party risks is higher.

Work at height or depth
Tasks involving ladders, scaffolding, elevated platforms or excavation increase premiums.

Required cover limit
Common limits include £1 million, £2 million, £5 million and £10 million. Higher limits cost more but are often required by clients and local authorities.

Add-ons and extensions
Product liability, tools cover, equipment protection and endorsements for hot works or hazardous locations increase the total premium.

These factors shape your overall risk profile and influence how much your cover will cost.

Public liability policies start with a base premium, with optional extensions and higher indemnity limits added as needed. Standard limits range from £1 million to £10 million. Increasing cover from £1 million to £2 million typically adds only a modest amount, while many larger commercial or local authority contracts require at least £5 million. Paying for your policy annually upfront typically costs less than paying in monthly instalments.

You can reduce your public liability premiums in different ways:

• Increasing your voluntary excess
  
• Demonstrating strong risk controls through your risk assessment and methods statements (RAMS), safety signage and staff training
  
• Installing security measures such as CCTV and controlled access
  
• Bundling public liability with employers’ liability or professional indemnity
  
• Maintaining a clean claims history
  
• Comparing quotes from multiple insurers to find competitive pricing

The cheapest public liability insurance often suits low-risk, standard trades, but always check that any lower-premium policy provides the cover you need rather than just meeting minimum legal or contractual requirements.

How much public liability insurance do I need?

Your required cover should match any contract or venue requirements and reflect the worst-case loss your work could create.

Common minimums include:

• £2 million
  For small venues and markets
  
• £5 million
  For councils, shopping centres and construction principal contractors
  
• £10 million or more
  For major events or government contracts

Consider the maximum realistic claim your work could generate. For instance, damage to a high-value property or injuries affecting multiple people at a busy location can quickly exceed lower limits. Aligning your cover to your exposure ensures adequate protection without paying for unnecessary capacity.

How to choose the right policy for your business

Choosing the right public liability insurance means matching the policy to how you work and the requirements you need to meet.

Match cover to your operations
Consider whether you work from fixed premises or as a mobile business and if your work is UK-only or occasionally overseas. Also, clarify if you carry out tasks involving height, heat or frequent public contact. These details determine the cover features and limits you need.

Compare policies like-for-like
Price alone rarely reflects the full value of a policy. Limits, excesses, territorial restrictions, exclusions, height and hot works conditions and claims support levels all play a part, and these details can vary significantly between insurers.

Provide evidence for contracts
Proof of cover is commonly required by contracts and venues, usually through a certificate of insurance and a policy schedule with relevant endorsements. Easy access to these documents can help avoid delays during bids or bookings.

Where to buy public liability insurance
Higher-risk trades often benefit from specialist brokers, while online providers suit more straightforward, standard risks. Working with an FCA-authorised insurer or intermediary ensures proper regulatory oversight.

This approach helps ensure your policy fits your work and offers the right level of protection.

How do I get public liability insurance in the UK?

Preparing a few core details makes it easier to obtain accurate quotes. Insurers will typically ask you for information on your business activities, annual turnover, recent claims history, the cover limit required for contracts or venues, and any risk controls or safety measures you have in place.

Get quotes or use a broker
Many standard trades can obtain multiple online quotes quickly, while higher-risk sectors often benefit from a specialist broker. Any required endorsements for height, heat work or hazardous locations should be confirmed before the policy is finalised.

Keep documents ready
Certificates of insurance and policy schedules are frequently required for tenders, supplier onboarding and venue bookings. Easy access to these documents helps avoid delays.

If annual insurance premiums or higher limits create cash flow pressure, iwoca’s flexible business loans can help you cover the cost. You can borrow what you need, repay early with no fees and only pay interest for the time you use the funds.

If you'd like to check your eligibility and get a decision within 24 hours, you can apply here.

‍