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

Having public liability insurance to cover legal defence costs and compensation in the event of an accidental injury claim can provide peace of mind. Knowing that your business is protected means you can focus on work, rather than financial security and potential lawsuits.

You might be wondering what happens if you don’t have public liability insurance. It could have several consequences, including financial risk and damage to your business reputation.

Immediate consequences of not having public liability insurance

Running a business without public liability insurance can leave you vulnerable to some immediate risks. You could be hit financially, legally and reputationally, for example potential legal defence costs if a member of the public alleges your fault has caused them accidental injury of damage to their property. Each of these consequences alone may significantly impact your business operations and sustainability. If they all hit at once however, you could be in for a particularly tough time.

Financial risks

Not having public liability insurance could expose your business to great financial risk. Having to cover costly claims out-of-pocket can leave you financially unstable and in extreme cases, lead to bankruptcy. Examples of potential financial repercussions can include:

• Legal fees:
• Compensation claims: If a customer, client or member of the public is injured or has property damaged as a result of your business’ activities, they can file a claim for compensation. Without public liability insurance, you have to foot that bill, and it could be substantial.
• Settlements and judgements: If your case does go to court and your business is found to be at fault, the resulting settlement can be These payments can run into tens or even hundreds of thousands of pounds and more. Without public liability insurance, your business will have to pay for it out of assets and revenue.

Public liability insurance will cover you for all these costs, up to the limit of i your policy.

Cash flow can be disrupted as a result of these significant fees. Sometimes overwhelmingly so. The absence of a financial safety net can lead to insolvency and bankruptcy. Having public liability insurance to fall back on can help to protect you from the brunt of any financial burdens.

Legal implications

Operating without public liability insurance can result in severe legal ramifications, even if it isn’t a legal requirement to have this type of cover. Not having this insurance can lead to lawsuits, legal fees and significant compensation costs.

Lawsuits and claims

• Personal injury: If a member of the public is injured on your business premises or due to your business, they may file a personal injury claim against you. Examples include slip-and-fall accidents or injuries caused by faulty products.
• Property damage: Claims can also arise if your business activities result in damage to someone’s property. (Note that public liability excludes damage to property in your control and to property being worked upon.)

The cost of public liability insurance versus the cost of claims

When deciding whether investing in public liability insurance is worth it, the decision is usually made easier when comparing the cost of the insurance to the cost of claims.

Cost of public liability insurance

• Premiums: Of course, the price you pay depends on business size and risk factors. It also depends on the level of cover you choose.
• Set expense: Allows for better financial planning and budgeting with no unexpected fees.

Potential claims costs

• Legal defence costs in defending your potential liabilities.
• Personal injury claims: These claims typically range from a couple of thousand pounds to significantly more. injuries, while ongoing medical care comes with an added cost.
• Property damage claims: This type of claim can reach tens of thousands of pounds if not more, depending on the circumstances and property at risk.

Public liability insurance can be an important safeguard for your business. The relatively low cost of premiums is a small price to pay compared to the potentially devastating financial impact of claims.

Long-term effects on business operations

The absence of public liability insurance can restrict business opportunities. While it’s not a legal requirement, many individuals, companies or government bodies won’t engage with businesses who don’t have this kind of coverage. This can severely limit any growth your business might otherwise have enjoyed.

Public liability insurance from Towergate

Our public liability insurance plays an important role in protecting your business against unforeseen accidents. They help mitigate the financial risks associated with personal injury or property damage claims. The long-term effects of not having this insurance can severely restrict business opportunities and bring growth to a halt.

Get a public liability insurance quote

If you’re interested in protecting your business with public liability insurance, you can get a quote from us today either online or by phone on 0330 818 9929.

About the author

Alison Wild BCom (Hons), MAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has 20 years' experience as a residential landlord.

The information contained in this article is based on sources that we believe are reliable and should be understood as general information only. It is not intended to be taken as advice with respect to any specific or individual situation and cannot be relied upon as such.

This is a marketing article by Towergate Insurance.