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Public Liability Insurance for Small Construction Businesses

U.K. Public Liability Insurance

Public liability insurance is cover that will pay out if you or someone who works for you causes a member of the public to suffer an injury or suffer some kind of financial loss.  Those sorts of risks are perhaps most likely to happen within the construction industry, where workers handle large pieces of equipment and are usually employed to make significant alterations to peoples’ property.

To give an example:  You own a small business within the construction industry and are employed by a customer to build a conservatory behind their house.  The Home Owner  asked that you take particular care because their neighbour’s garage is situated right next to the area where you will be building.  During construction, your young apprentice uses the wrong

Shed roof antics

Shed roof antics—marktristan (Flickr.com)

ladder (you didn’t tell him that he needed a different type, thinking that he’d only learn through experience) and manages to fall off the conservatory roof and lands right on top of the garage, breaking the roof and injuring his spine in the process.  To add further misery, the neighbour was inside the garage at the time and suffered a broken arm and concussion, whilst a lady who happened to be walking past the house at the time suffered a cut to her face from some flying bits of debris from the garage.

If you were completely without insurance, you would need to pay:

  1. to repair the garage;
  2. to compensate your apprentice for his injury;
  3. to compensate the neighbour for his injuries;
  4. to compensate the lady on the street for her injury;
  5. for all your own legal costs plus those of the apprentice, neighbour and lady;
  6. a considerable fine for not having employers’ liability insurance in place despite employing the apprentice (you would also receive a criminal record).

This could easily run into tens of thousands of pounds or even hundreds of thousands.  Could your small business or start-up afford to pay that kind of money?  How much time would you have to spend in court when you could be out working?  If you couldn’t afford to pay from your business’s assets or income, the courts would expect you to pay from your own assets such as your savings, investments, cars and home.  If you couldn’t pay, you’d be given a CCJ (County Court Judgement) that would adversely affect your credit history.

To avoid this type of nightmare scenario, you should:

  1. Ensure that you and your employees are all adequately trained in health and safety procedures including those related to working at height.
  2. Take out public liability insurance (this would pay for the compensation to the neighbour and lady, as well as the garage repair costs and  all relevant legal fees, plus some will pay a fixed amount to cover each day that you have to attend court);
  3. Take out employers’ liability insurance (that would pay for your employee’s personal injury and related legal fees, and of course would mean that you avoid the fine and criminal record).

Most savvy clients will check that you have public liability insurance in place before allowing you to carry out any work, and most major clients (such as local authorities) will demand that you have considerable cover in place or they won’t give you any work.  Public liability insurance and employers’ liability insurance are perhaps the most important forms of protection you can offer to your business.

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