What Is Public Liability Insurance?


Public liability insurance is a policy taken out by a business that deals face-to-face with the public, whether the customer comes to the business or the business goes to the customer. A customer can sue a business if that business either causes damage to the customer’s property, or causes injury to the customer. A public liability policy can protect the business owner in case of such a suit.

What It Covers

In the event that a customer sues your business and wins, public liability insurance would cover the costs of such things as awards or damages to the customer. Also covered by a PLI are such auxiliary expenses as legal fees, costs and expenses, along with any hospital bills incurred by the customer.


It’s hard to get a handle on an average premium for this type of insurance. But a wide variety of factors are taken into account, including the business type and the level of activity, or customers, the business serves. Businesses with high turnover, like hotels, likely have their premium figured partially on the number of beds, and in turn the number of guests, they have in their hotel each night.

Who Has To Have It

Generally, the requirements for a PLI policy vary from state to state, but the only business insurance an American business is required to have is workers’ compensation. But given the protection a PLI can provide to a business that deals with the public, especially business that serve large numbers of the public such as concert venues and professional sports teams, it seems to make sense. In the United Kingdom, all businesses that serve the public are required to have this insurance. It is also possible that a potential customer won’t use your service if you don’t have a PLI.


The benefits of a PLI are three-fold. First, there’s the obvious indemnity coverage for your business. In the event that you lose a suit, you use the money provided by your PLI policy to pay the claim and not your business, or even personal, assets. A PLI can offer enough protection to help your company avoid bankruptcy in the event of a large claim. And the coverage can even be extended to your employees as a way to protect them in case they personally make mistakes while serving your clients.

Get A Quote

Steve Smith, an insurance agent who contributes to howtodothings.com, writes that a potential PLI policyholder should be prepared to answer questions about his business when attempting to acquire a policy. Those questions will include the type of business, how many workers, how long the company has been publicly traded, the company’s experience and the desired level of coverage.

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