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What Is Public Liability Insurance? How Do I Know My Business Needs It?

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    As a small business owner, you might think you don't need insurance, but here's the reality — even one customer slip and fall accident can cost you approximately $35,000. That's a significant amount — one that has the potential to undo all your hard work and jeopardize your livelihood.


    The threat of lawsuits in small businesses is real, and having the correct insurance can make all the difference between your business's success and failure.

    One of the most affordable insurance coverages for small business owners like yourself is public liability insurance. Learn all about this coverage and why it makes sense for you to have it.

    What Is Public Liability Insurance? 

    Public liability insurance (PLI) covers accidents and damages incurred by third parties as a result of your business. For example, an employee could spill coffee over a customer's designer bag in your restaurant or a customer could slip while entering your store.

    In the U.S., PLI applies strictly to injuries, accidents and property loss suffered by members of the public, which include customers, visitors and delivery personnel. It doesn't cover any damage caused to employees or yourself in the line of work.

    What exactly does public liability insurance cover? Let's take a closer look:

    • Bodily Injury: This covers expenses if a member of the public is injured.
    • Property Damage: This covers damage to a third party's property. Let's say you are delivering a product and accidentally knock over a client’s mailbox; the policy could help cover the cost of replacing the mailbox.
    • Legal Expenses: A PLI will also cover the cost of hiring and paying an attorney in case of a lawsuit.

    Insurance for Small Businesses From Our Trusted Partner - The Hartford

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    Who Needs Public Liability Insurance? 

    PLI is crucial for businesses that deal with other people and the public at large. So, if you are wondering, “Do I need public liability insurance if I am self-employed?” or “Do I need insurance even if I operate from home?” The short answer is yes. It’s a good idea to get a PLI if you answer in an affirmative to any of the following statements:  

    • You work from home and have clients coming to visit.
    • Members of the public frequently visit your business’s premises (restaurant, retail, showroom).
    • Your business hosts or organizes events/activities.
    • You work in public areas where people have easy access.
    • The business involves making deliveries to customers’ homes and other public places. 

    Common businesses that benefit from have a PLI include:

    • Real estate agents
    • Hospitality
    • Retail
    • Healthcare
    • Contractor/repairman
    • Delivery services

    If your business doesn’t require you to interact with any of the above or there is limited public interaction, then you might not need PLI. But, it’s best to speak to an insurance provider and evaluate whether having a PLI would be beneficial to you. You could also assess your business risk using this work-from-home insurance guide.

    What Happens If I Don’t Have Public Liability Insurance?

    According to a survey by AdvisorSmith, 76 percent of small businesses experienced an event that could have led to an insurance claim. So, the likelihood of your business facing a similar situation is high. And, if you do face any legal trouble, your business could face a huge financial setback.

    Without PLI, you are responsible for covering any legal fees and settlement amount directly out of your pocket. The Small Business Administration’s Study on Litigation states just the legal costs for litigation can run anywhere from $3,000-$150,000. While getting a PLI is an added cost that you have to consider while running a business, it’s worth the added expenditure because accidents can happen anytime, anywhere.

    PLI vs. General Insurance — What’s the Difference?

    PLI is often seen as a “starting point” coverage for most small businesses as it’s one of the more affordable insurances you can take out. However, it doesn’t provide extensive coverage like that of general insurance. For instance, a PLI will not provide coverage if your employee has an accident in the line of work or if you injure yourself while completing a job. Also, if there is an error as a result of professional negligence — for instance, you made a mistake while calculating taxes for a client and they decide to sue — you won’t be covered. Lastly, any expenses exceeding the coverage in the policy are the responsibility of the business owner.

    General Liability Insurance (GLI), on the other hand, is a more comprehensive policy that protects against losses incurred by the general public, vendors, employees and even other business owners. GLIs are substantially more expensive, ranging from $750 to $2,000 annually, and therefore be trickier to work into your budget.

    How Much Does Public Liability Insurance Cost?

    The cost of getting a PLI comes down to your business specifics. The final amount depends on what exactly your business is and its location. Other factors generally considered in policy estimations include type of property and previous claims (if any) history. 

    Ready to Protect Your Business? Here’s Where to Get PLI

    Even the most careful of businesses run the risk of injuring someone or damaging something through the course of business. As a small business owner, getting a PLI is one of the best and most affordable financial investments you can make because any liability claim could potentially send you out of business. Securing public liability insurance provides your business with the protection it deserves.

    So if you're ready to protect your business, where can you get PLI? You can speak to your existing insurance provider to see if they carry this insurance and what coverage would be best suited for you. There are several online insurance brokers, like The Hartford, that can help you determine the right policy and secure a quote in under five minutes.

    Insurance for Small Businesses From Our Trusted Partner - The Hartford

    Get Started for as Low as $25/Month

    Get a Quote

    Swara Ahluwalia

    Swara Ahluwalia

    Swara Ahluwalia is a freelance content writer with experience in the technical, B2B and SaaS domain. She also has curated content for various lifestyle brands. In her downtime, you will most likely find Swara training for her next marathon or spending time with her two daughters.


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