Public liability insurance explained: guide for IT contractors

Public liability insurance covers you against claims from members of the public for property damage or personal injuries caused as a result of your trading activity.

The official definition of PL Insurance, according to the ABI, is to “cover claims made by members of the public for incidents that occur in connection with your business activities.”

Specifically, it will cover the costs of:

• Legal fees
• Compensation claims
• Cost of repairing any damage

If you are an IT contractor, do you need to take out a public liability policy?

Some typical scenarios covered by PL Insurance

Public liability insurance will protect your company against claims involving injury to third parties or damage to their property arising from your business activities and what your employees do.

Here are a few examples of when public liability insurance does apply:

• A visitor to your premises trips over loose cabling and gets injured.
• An employee from your company accidentally damages a client’s server during on-site work.
• While delivering an IT training session, an overhead projector slips and injures an attendee’s arm.

Public liability is designed for the general public and third-party property. It won’t cover you as the business owner or your own employees.

Here are examples of where public liability insurance does not apply:

• An employee hurts themselves on the job. This falls under employers’ liability insurance.
• You, the company director, damaged your own server. You need equipment insurance to cover this type of scenario.

Is it a legal requirement?

No, there is no legal requirement to have public liability cover. However, it offers peace of mind and is inexpensive.

You might not have a choice in the matter, as clients often stipulate that cover is needed as a contractual condition.

Many recruitment agencies and end clients now require proof of public liability (typically at least £1 million or £2 million) in supplier agreements, even for low-risk IT work.

How much public liability cover do I need?

The amount of cover you take out depends on the type of business you run.

Insurers typically quote for £1 million or £2 million of cover, although you can obtain quotes for amounts up to £5 million or £10 million.

For IT contractors, £1 million to £2 million is often sufficient and commonly accepted by clients, but some contracts specify £5 million or more.

Insurers often offer public liability cover as part of a general business insurance package, which may also contain employers’ liability cover and even ‘office insurance’.

If you are an umbrella company contractor, make sure your provider has comprehensive business insurance. Ask your account manager if you are unsure.

How much does public liability insurance cost?

Cover tends to be competitively priced – especially if you work in a low-risk occupation, such as IT contracting.

Premiums are influenced by several factors, including:

• Your claims history.
• The nature of your occupation.
• How many people you employ.
• Your turnover.

IT contractors are seen as a low-risk group, so premiums are competitively priced – often less than £10 per month (or around £50–£150 annually when bundled with other insurance, such as employers’ liability and professional indemnity).

Is public liability insurance tax-deductible?

Yes, like professional indemnity and employers’ liability insurance, business insurance is a legitimate tax-deductible expense.

How can I get a public liability quote?

Get a quote from under £5/month with our long-term partner, Qdos.