What is public liability insurance? 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 is: ‘The insurance of liability for accidental bodily injury or damage to the property of third parties.’

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?

What scenarios does public liability protect you from?

A public liability policy protects your company from claims for third-party injuries or property damage that results from its operations and the actions of its employees.

Here are some examples of where public liability insurance does come into play:

  • A potential customer suffers an injury by tripping over cabling in your company’s premises.
  • One of your company’s employees accidentally damages a client’s server while working on-site.
  • You run an IT training course. An overhead projector falls on an attendee, causing an arm injury.

Public liability covers members of the public, and third-party property. It does not cover you – the business owner – or your employees.

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

  • Your employee injures himself while working for your business. Employers’ liability insurance covers this type of claim.
  • You (the business owner) damage your own computer. You need equipment cover for this type of eventuality.

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.

How much public liability cover do I need?

The amount of cover you take out is related to the type of business you run.

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

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 in place. 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/month.

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.

Professional Indemnity Insurance for Contractors

Industry leading PI insurance - from just £13.50 per month via Qdos. Business liability and IR35 insurance cover also available.

Last updated: 6th February 2024