Public liability insurance is the term used in the United Kingdom for what United States agents call general liability insurance. U.K. policies cover claims your business caused another party’s injury or property damage. There is a U.S. public liability policy that costs approximately 10% less than general liability insurance but offers limited coverage.
To protect your business from third-party liability claims, online brokers such as CoverWallet take the time to review costs and coverage of all liability policies to help you determine the right policy to purchase. Get a quote in as little as five minutes.
What Is Public Liability Insurance?
Public liability insurance is a form of insurance in the U.K. designed to protect business owners against claims coming from members of the public. These are known as third-party claims. In the U.S., public liability insurance is a type of liability insurance that covers your business from the same types of bodily injury claims without covering personal injury incidents.
In either case, most common coverage scenarios for public liability involve slip-and-fall accidents where a third party experiences either injury or property damage while at the business’ place of operations. Moreover, both the U.K. and U.S. public liability insurance policies exclude personal and advertising claims. This is why public liability is less expensive than general liability insurance in the U.S.
What Public Liability Insurance Covers
Public liability insurance in the U.K. covers third-party bodily injury and property damage suffered by non-employees because of your work along with related legal fees for claim resolution or defense. For example, if a client slips and falls over a piece of your equipment, public liability covers their medical bills or your legal expenses. U.S. public liability insurance only covers the client’s injuries if they occur on your business premises.
In both the U.K. and the U.S., public liability insurance covers:
- Bodily injury: Customers or other members of the public slipping, falling, or otherwise getting injured is a large financial risk covered by public liability insurance. In the U.S., public liability policies only cover accidents at your place of business.
- Property damage: Pays for damages you do to a third party’s property while performing your work. If you’re a painter and a ladder falls on your customer’s car, for example, public liability insurance would help cover the cost of repair
- Legal expenses: If a third party sues you as a result of injury or property damage, public liability insurance helps cover the associated legal costs, up to the limits of your policy
Businesses that work directly with the public are the most susceptible to these third-party liability risk exposures, and these businesses may be able to get away with only having public liability insurance, but most agents say this is a bad idea.
What Public Liability Insurance Doesn’t Cover
While there is more than one exclusion to public liability insurance policies, the most notable exception is the lack of coverage for personal injury and advertising injury. Personal injury differs from bodily injury in that the former refers to character attacks such as libel and slander. Advertising injury refers to copyright infringement and accusations of incorrect comparisons to competitors.
It is this exclusion that makes public liability insurance cheaper than general liability insurance but also very difficult to find in the U.S. Most carriers feel it is poor coverage for high-risk claims, and that it’s irresponsible not to offer clients a product that covers more for just a few extra dollars a month.
Consider the costliest third-party claims compared to the most frequent.
Common Small Business Claims With Average Cost
Percentage of Small Business Claims
Average Claim Cost
Covered by Public Liability
Customer Injury and Damage
Less than 5%
Depending on location
Reputation Harm (Personal Injury)
Less than 5%
Source: Insurance Journal, The Hartford’s Claims Analysis
“Limitations on public liability insurance [in the U.S.] are somewhat extreme. Public liability insurance only covers the liability of a customer’s injury while on the business property. This means that any injury suffered by a third party on the property and the legal fees associated with the injury are covered by the insurance company.”
―Mark Charnet, President & Founder, American Prosperity Group
Events typically not covered by public liability insurance include:
- Personal and advertising injury: Claims arising from potential libel, slander, copyright infringement, wrongful eviction, and similar claims where no bodily harm exists but financial harm can be proven by general liability in the U.S.
- Employee injuries: U.S. employers need workers’ compensation insurance for employee injuries.
- Professional negligence: Errors and omissions insurance covers accusations your professional work caused a client financial harm.
- Liquor liability: Neither public liability nor general liability insurance policy covers any damages or injuries that result from alcohol sales or consumption. Liquor liability insurance may be available for an additional premium on some policies.
- Product liability: Also known as products-completed operations coverage, this involves any damages from the final product distributed and sold. Manufacturers and distributors require product liability.
- Commercial vehicles: Company vehicles require commercial auto insurance to protect against liability when they’re at fault in auto accidents. Vehicles could include anything from a semi-truck to a fleet of company cars for a sales team, to a food truck.
Public Liability Pros and Cons
Every business should have some insurance to protect them from expensive claims that could become a financial burden to the company. There are both pros and cons to the public liability insurance policy. If you are considering public liability over a general liability policy, understand the benefits vs what you are giving up.
The pros of public liability insurance include:
- Cheaper: Averages 10% less in premium costs
- Covers most common claims: Provides coverage against the most common claims
The cons of public liability insurance include:
- Limited protection: No coverage for the costliest claims
- Hard to buy: Difficult to find a broker who can sell it
- Confusing: Highly misunderstood by small business owners
Most insurance agents agree that the cons in this case far outweigh the advantages of saving a few dollars. Few national carriers offer public liability as a standalone policy to small business owners. If you still want to buy limited coverage public liability insurance, contact a surplus lines insurance broker.
“In the U.S., public liability insurance has a significantly narrower scope of coverage than general liability insurance. Public liability insurance covers bodily injury and property damage suffered by visitors to the insured’s business premises. Think along the lines of a delivery person who trips on a wire or a client who is hurt on a broken conference room chair. Coverage is limited to injuries suffered by visitors at the premises of an insured business. In contrast, general liability insurance is broader, covering a wider range of on premises injuries as well as personal and advertising injuries, and accidents taking place off-premises that result from an insured’s operations or products. The benefit of public liability insurance is that it is significantly less expensive than general liability insurance; it may be a cost-effective option for some businesses with a small footprint, such as service or professional businesses that see clients or customers at the office or store.”
—Daniel J. Struck, Partner, Culhane Meadows
After a detailed analysis, we recommend purchasing a general liability policy. You can find policies that start as low as $250 with most average $400 based on industry risk. To pay an extra $2 to $4 per month is well worth the investment for added coverage. Visit The Hartford to see how their comprehensive business owner’s policy (BOP) can get you more than the protection you sought in public liability policies for about the same price.
Public Liability Insurance Cost
In the U.S., public liability insurance costs vary based upon several factors, but most small business owners can expect to pay a minimum of $250 annually. This is approximately 10% less than a standard general liability policy or BOP, which average about $400 to $600 annually, depending on the risks in your industry and operations.
Public Liability Insurance Cost Averages by Industry
Average Cost Per Year
Janitors & Maids
Some additional factors that impact public liability insurance cost are:
- Physical size: Bigger locations with more square footage or foot traffic increase the chances of consumer accidents.
- Revenues: Many insurance companies see revenues as an indicator of risk because higher revenues mean more transactions and thus greater chance of a claim; plus companies doing well tend to be targets for fraudulent claims that still need to be defended.
- Deductible amount: Most public liability policies don’t have deductibles, but some insurance providers allow high-premium policies to choose a deductible to reduce annual premiums.
- Industry risks: Industry has a direct correlation to risk; the owner of a bounce house business is at risk of customers getting injured whereas an accountant has less risk of in-office injuries.
- Claims history: Insurers often reward business owners who keep customers safe with lower premiums while claims typically cause premiums to rise.
- Location: States have different insurance laws and pricing; even ZIP codes can generate different premiums based on local crime or population density.
Every commercial insurance company uses all of these factors along with internal data to determine the final price of a policy. Insurance providers tend to have a preference, called an appetite, for certain industries and have better pricing for that appetite.
Who Public Liability Insurance Is Right For
Most small business owners have some exposure to third-party risk and need at least a moderate or basic general liability policy. Policies are not required unless your landlord, city, or client requires it, but if you don’t have the resources to pay even a small $20,000 claim, you should consider buying one.
Public liability insurance, in particular, is a good option for a business that wants to save money but still be covered for the most common risks.
Some small businesses with the most public liability exposures include:
- Retail shops
“A business owner may buy public liability insurance to save money vs buying a general liability policy. However, I would highly recommend against that because the public liability policy will not cover claims made by employees, shareholders or vendors (first and second parties). The cost savings rarely is worth the added risk.”
—Matthew A. Struck, CPCU, ARM, MBA, partner, Treadstone Risk Management
Tips on Applying for Public Liability Insurance
Applying for insurance is relatively the same across various businesses and industries, but public liability insurance isn’t something your local insurance agent is likely to offer. These tips can help you get the policy you need.
Here are three tips to use when applying for public liability insurance.
1. Determine if You Want Public Liability or General Liability
Consider the risks and talk to other small business owners in your industry about the claims they have faced. Do your homework on what types of claims you want to have covered. Public liability only covers slip-and-fall accidents and property damage but not personal or advertising injury the way general liability does. If you have these additional risks, public liability insurance may not be right for you.
2. Find a Surplus Lines Broker
Surplus lines brokers are insurance brokers with a specialty designation to shop highly uncommon policies or unusual risks. Don’t assume every insurance broker can offer public liability insurance and confirm what products they are selling you.
3. Compare Public Liability Costs to Business Owner’s Policy Costs
Even though the rule of thumb is less coverage should be cheaper―10% less expensive in the case of public liability insurance―business owner’s policies over everything general liability insurance covers plus business property and business interruption insurance. Best of all, it is usually less expensive than buying all of these coverages separately. Do a cost analysis to see what the benefits are and save a few dollars every month.
Public Liability Insurance Frequently Asked Questions (FAQs)
Public liability is a very confusing type of insurance product because many people assume the term only refers to a policy sold in other countries. The following are some of the most frequently asked questions.
What is public liability insurance in the U.S.?
Public liability insurance in the U.S. is a policy that covers the more frequent claims of bodily injury and property damage to third-party visitors to your business premises. It does not cover personal injury―libel and slander―and advertising injury claims that general liability insurance covers.
Who can get public liability insurance?
Public liability is less common than general liability, partly because it provides minimal coverage. This makes it more difficult to find. Small business owners can purchase a public liability policy through a surplus lines insurance broker licensed in their state.
What is the difference between public liability and general liability insurance?
The main difference between public liability and general liability is the exclusion of personal and advertising injury that general liability insurance includes. Public liability is also the name of an insurance policy more commonly found in the U.K. and Australia and other places outside of the U.S.
Every business should have even a small general or public liability insurance policy to protect them against unforeseen accidents and lawsuits. As a business grows, the risk increases with public exposure. Starting with a general liability policy to cover some of the biggest risks is the most cost-effective solution.
If you’re thinking of buying a public liability policy in the U.S., you likely need commercial general liability insurance. Whether it is public liability insurance or CGL insurance that you’re buying, CoverWallet has a team of experts who can show you the benefits and cost savings to bundle liability plus property coverage in one simple BOP. Get a free quote in as little as five minutes.