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PLI 101: What Is Public Liability Insurance and Does My Business Need It?

You’ve worked for years to bring your dream business to life

Whether you’re self-employed or manage a team of hundreds of people, you don’t want a lawsuit from a customer or a member of the public to destroy everything you’ve created. 

That’s why you should get public liability insurance (PLI) before you even open your doors for business. 

But what is public liability insurance? Furthermore, why does your business need it in the first place? 

Read on to learn what PLI insurance does and does not cover, and understand why it’s just one of the many kinds of insurance your business should have. 

What Is Public Liability Insurance?

Before we get into anything else, let’s first make sure you’re clear on what PLI insurance actually is. 

If you’re self-employed or own a small business that’s open to the public, you’ll likely need PLI. The same goes if you visit your clients in their homes or places of business. If you work in a public space (like if you have a contract construction company) you’ll also need it.

When your company interacts with the public in any way, accidents can happen.

Someone could slip on the floor of your shop and hit their head. Someone attending an event at or for your business could get injured. If you’re working on a construction site, a piece of equipment could fall and break someone’s leg. There have even been cases where signs for a business have fallen on and injured people. 

It’s likely that the people who have gotten hurt will be interested in filing a lawsuit against your company. Having public liability insurance protects you in lawsuits filed by both your customers and members of the general public.

Public liability and property damage insurance cover your business in both lawsuits and any payments you have to make as a result of those lawsuits. 

Now that you can answer the question, “What is public liability insurance?”

Let’s take a deeper look at what exactly PLI covers. 

What It Covers

First of all, PLI covers your legal expenses in the event that you’re sued by a member of the public for either property damage or bodily injury.

It also covers the cost of any property damage that your business inflicts on a member of the public’s property. This might be damage to a car, a home, or even damage to certain possessions. 

PLI will also offer coverage against bodily injury for both your specific customers and members of the public in general. (Meaning that you’ll be covered for someone who fell inside of your store, for example, as well as someone who was walking by your shop and was injured by falling debris from your roof.)

There are, of course, many different types of liability insurance. Each one comes with a limit of how much coverage you’ll receive, so choose your policy carefully. Review policies from places like Tradesman Saver to get a better understanding of specific coverage options.  

What Liability Insurance Doesn’t Cover

Unfortunately, liability insurance doesn’t cover everything.

First, you won’t get coverage for any mistakes or omissions you made over the course of business. If you want coverage for that, look into professional liability insurance. 

Additionally, it’s extremely important to understand that PLI doesn’t cover employee injuries. Only worker’s compensation insurance can offer you that kind of coverage. Unless you’re the only person working for your company, you absolutely need to have worker’s comp.   

Finally, public liability insurance won’t offer you any kind of coverage when it comes to libel or slander (often called “personal injuries”). These are comments and claims that hurt your business’s reputation. 

You also won’t be covered for advertising injury, which is when you make a false claim about a competitor and are sued as a result.

The Benefits of PLI

So, why should you invest in public liability insurance? 

First of all, because it could save your business, especially if you’re facing a hefty lawsuit. Smaller businesses or self-employed individuals may not always have the means to cover large lawsuit payouts on their own. 

We know you don’t want to have to close your business down in order to afford your legal fees and lawsuits. PLI prevents that from happening. 

Additionally, no matter how careful you are, sometimes, there are circumstances you just can’t control.

If you’re a taxi driver, you can’t help it that someone else on the road decided to cut you off and hit your car. You can’t control gale force winds that knock debris onto customers as they enter your shop. And that child with an ice cream cone that dripped on your floor, later causing a customer to fall? Nothing you could have done to control that, either.

But trust us when we tell you that customers will still seek ways to hold you responsible for situations like all of the above. There have even been reports of people faking their own slip-and-fall injuries in an attempt to get large payouts. 

You want to make sure you’re prepared to protect your business.

Public Liability Insurance Is Essential

Thanks to this post, you’re now able to do much more than just answer the question, “What is public liability insurance?”

You have an understanding of why it matters, and even examples of some incidents it will help to protect you against. 

Looking for additional ways to protect your business? Want to learn more about the types of commercial insurance you might need? 

We’re here to help. 

Keep checking back with us to make sure you’re always taking the right steps to protect your company, yourself, your employees, and your customers.