Whilst Public liability insurance provides valuable coverage for businesses, it’s important to understand its limitations. Knowing what isn’t covered can help you manage risks more effectively and ensure the right coverages is in place.

Understanding Public Liability Insurance

Public liability insurance covers legal costs and compensation payments if your business is found liable for causing injury or property damage to third parties. This coverage is essential for companies of all sizes and types, providing a safety net against unforeseen incidents that could lead to financial loss. It doesn’t, however, cover all eventualities, as seen in the following nine examples.

• Employee Injuries and Illnesses

One significant exclusion in public liability insurance is coverage for employee injuries and illnesses. Public liability policies are designed to cover third-party claims, not those from your employees.

Scenario: Jane’s Construction Company

Jane runs a construction company, and one of her workers gets injured on the job. Since the injury involves an employee, Jane’s public liability insurance doesn’t cover it. Instead, workers’ compensation insurance is necessary to cover medical expenses and lost wages.

• Professional Indemnity

Public liability insurance does not cover claims arising from professional advice or services you provide. This type of risk is addressed by professional indemnity insurance, which protects against claims of negligence or mistakes in your professional services.

Scenario: Mark’s Consulting Firm

A client sued Marks’ consulting firm for giving poor advice that led to financial loss. Since public liability insurance won’t cover this claim, Mark has professional indemnity insurance to protect his business from these risks.

• Product Liability

While public liability insurance covers injury or damage caused by your business operations, it doesn’t typically cover claims related to the products you manufacture or sell.

Scenario: Sarah’s Bakery

Sarah runs a bakery and sells baked goods to the public. Because public liability insurance won’t cover a claim if a customer becomes ill from consuming one of her products, Sarah has product liability insurance to protect her business.

• Contractual Liability

Claims arising from contractual obligations are generally excluded from public liability insurance. If you assume liability through a contract, you might need additional coverage to protect against these risks.

Scenario: Tom’s Catering Business

Tom’s catering business enters into a contract with an event organiser that includes a clause holding Tom liable for any damages during the event. Due to the contractual liability exclusion, public liability insurance may not cover the claim if an incident occurs. Tom should review the contract and consider additional coverage.

• Intentional Acts

Public liability insurance does not cover intentional acts or deliberate harm caused by you or your employees. Claims resulting from intentional damage or injury are excluded from coverage; however, some policies cover the financial impact of specific intentional acts.

Scenario: Jane’s Restaurant

Jane owns a restaurant where one of her employees intentionally damages a customer’s property. Since the act was intentional, public liability insurance won’t cover the claim, and without more specific insurance, Jane must cover any costs herself.

• Fines and Penalties

Public liability insurance does not cover fines, penalties, or punitive damages imposed by regulatory authorities. Businesses must comply with laws and regulations to avoid these costs.

Scenario: Mark’s Retail Store

Mark’s retail store is fined for violating health and safety regulations. Public liability insurance won’t cover the fines or penalties, so Mark needs to ensure compliance with all regulations to avoid such costs.

• Asbestos-Related Claims

Claims related to asbestos exposure are typically excluded from public liability insurance. Specialised asbestos liability insurance is required to cover these risks.

Scenario: Sarah’s Renovation Company

A third party sued Sarah’s company because they discovered asbestos in an old building they were renovating. While their public liability insurance won’t cover the claim, her asbestos liability insurance provides the necessary coverage.

• Cyber Liability

Public liability insurance does not cover claims related to data breaches or cyber-attacks. Cyber liability insurance is necessary to protect your business from the financial impact of cybercrime.

Scenario: Tom’s Online Store

Tom’s online store experiences a data breach, compromising customer information. Public liability insurance won’t cover the costs associated with the breach, but his cyber liability insurance provides the necessary coverage.

• Pollution and Environmental Damage

Public liability insurance usually excludes claims related to pollution or environmental damage; environmental liability insurance is required to cover these risks.

Scenario: Jane’s Manufacturing Plant

Jane’s manufacturing plant accidentally spills hazardous chemicals, causing environmental damage. Public liability insurance won’t cover the claim; however, her environmental liability insurance provides the coverage she needs.

Ensure Comprehensive Coverage

Contact Morgan Insurance Brokers today to review your current policies and discuss the best strategies to achieve comprehensive coverage for your business. Don’t leave your business exposed – get the expert advice you need to stay protected.