What is public liability insurance, and what does it cover?

What the cover does

Public liability responds when a third party, meaning someone who is not you and not your employee, suffers injury or property damage because of your business and holds you legally responsible. The policy covers what you owe them, up to your cover limit.

What that looks like in practice

The claims are ordinary, and they are rarely dramatic.

• A customer trips over the cable running to your card reader and breaks a wrist.

• You put a drill through a client's water pipe and the ceiling below comes down.

• You knock a laptop off a desk during a site visit.

• A delivery you left in a doorway sends someone flying.

• A tile you fitted comes loose two months later and injures a visitor.

The common thread is somebody else and their body or their belongings.

What it does not cover

Four things sit outside it, and each has a cover of its own.

Your own property. Damage to your own tools, stock or premises. That is property or contents insurance.

Your own injuries. If you are the one hurt, public liability does not respond. Personal accident or income protection cover does.

Your staff. Claims from your own employees need employers' liability, which with Insify is an optional addition to public liability once you hire.

Purely financial loss. A client out of pocket because of your advice or your work, with nobody hurt and nothing broken. That is professional indemnity.

Beyond those four, policies carry exclusions attached to your declared activities, which is why the activities you select when you apply decide what you are covered for.

Is it compulsory in Ireland?

No, and that is less reassuring than it sounds. Citizens Information states that you are not legally obliged to be insured when carrying on a business, while recommending cover for a list of situations anyway. One of its examples: if the public can get into your business premises, you should hold public liability insurance.

In practice, the requirement arrives commercially rather than legally. Contracts, landlords, venues, event organisers, main contractors and public tenders routinely ask for cover at a stated limit before work begins, and that request tends to land after you have won the job.

The two settings that define your policy

Your cover limit is the maximum paid for a single claim, and there is a separate annual cap of twice that amount. Contracts and tenders often call it the limit of indemnity, which is the same thing. In the Irish market, it is usually quoted in millions, and with Insify public liability goes up to €6.5 million per claim, depending on your profession. If a contract sets a minimum, check it against your quote before you sign.

Your excess is the part of each claim you pay yourself before the policy pays the rest. It can start from €0, and a higher excess lowers your premium.

Those two decide both what the policy is worth to you and what it costs, which is why comparing monthly prices without comparing limits and excesses tells you almost nothing.

Insurance self-employed people and sole traders for sole traders in Ireland

Insify offers business insurance for self-employed people and sole traders in Ireland:

• Public liability insurance is for claims that your work injured someone or damaged their property, starting at €7.55 per month including taxes, with employers' liability available as an optional addition once you have staff.

• Professional indemnity insurance is for claims that your advice or your service cost a client money.

Insify is an insurance intermediary. This article is general information about registering as a sole trader in Ireland and is not tax, legal or financial advice. Rates, thresholds and deadlines change, so check the Revenue, CRO and Citizens Information pages linked above for the current position. What a policy covers, along with its limits, conditions and exclusions, is set out in the policy documentation, which you should read before taking out cover.