What Is Public Liability Insurance?

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Public liability insurance (PLI) covers liability claims made against your business by members of the general public for bodily injury or property damage. For example, if a customer visits your store and slips on the floor, then your PLI policy will cover their medical bills plus legal defense costs if it leads to a lawsuit. Public liability coverage has largely been replaced by general liability insurance, which offers more comprehensive protection.

How Does Public Liability Insurance Work?

Public liability insurance provides commercial coverage for your business if a member of the general public holds your business responsible for their injuries or property damages.

PLI will pay for medical bills when your business can be held liable for the bodily injury of a member of the general public.

For example, say you own a restaurant and there is a spilled drink on the floor but no employee has come to clean it and there is no wet floor sign. A customer, a member of the general public, slips on the wet floor and breaks their elbow and hip, and sues you to get reimbursed for their medical bills and pain and suffering. You file a PLI claim with your insurance provider to get those medical bills covered.

PLI will pay if a member of the general public holds you responsible for damages to their property, too.

For example, say you run a coffee shop and a customer orders a coffee. While you are handing the customer their coffee, it slips from your hand and spills on their smartphone and laptop. Both devices are now defective and unfixable. The customer sues you to get reimbursed for their smartphone and laptop. You file a PLI claim with your insurance provider to cover these costs.

If a claim goes to court, PLI will help cover your legal costs. If the claimants in either of the examples above sue your business for their losses plus pain and suffering, then PLI will pay for settlement costs, attorney fees and other legal expenses.

What Is Covered by Public Liability Insurance?

A public liability insurance policy will only cover liability claims related to bodily injury or property damage suffered by a member of the general public.

  • Bodily injury coverage: Pays for medical bills and legal fees when the business can be held liable for the injuries of a member of the general public. For example, PLI would pay for costs related to a customer slipping on a wet floor or tripping on a rug.
  • Property damage coverage: Pays to reimburse for or replace damaged property when the business can be held liable for damages or losses to property belonging to a member of the general public. For example, PLI would pay for costs related to spilling a beverage on a customer’s electronic device or a store sign falling on top of their car.

What Is Excluded From a Public Liability Policy?

A public liability insurance policy will not provide coverage for workplace employee injuries, liability related to pollution and more.

  • Liability costs incurred while driving a commercial vehicle
  • Damages to your commercial property and assets
  • Employee workplace injuries
  • Professional errors or omissions made by you or your employees (e.g., bad marketing advice, accounting mistakes, incorrect legal counsel)
  • Intentional acts
  • Pollution
  • Expenses that exceed the limits in your policy

How Much Does Public Liability Insurance Cost?

The cost of public liability insurance will vary and will consider several factors, including:

  • Type of business and industry
  • Location
  • Size and number of employees
  • Prior claims history

Public liability insurance has largely been replaced by general liability insurance (GLI), which can range from $11 to $128 per month, on average according to Next Insurance. Since PLI typically costs less and offers less coverage than GLI, you can expect average costs lower than this range.

Does Your Business Need Commercial Liability Insurance?

When Do You Need Public Liability Insurance?

There is generally no state requirement to maintain public liability insurance but it may be necessary when applying for a type of business license (e.g., plumbing, construction, electrical) or submitting a bid for a government contract. Even if it’s not required, it’s always a good idea to have coverage.

If you do not have public liability insurance, you are fully responsible for paying out of pocket for injury or property damage claims made against your business by members of the general public.

What Is the Difference Between General and Public Liability Insurance?

General liability insurance covers everything that public liability insurance does and more. On top of covering injuries and property damage claims filed by the members of the general public, GLI will also provide coverage for personal injury (e.g., libel, slander), misleading advertising and defective products. While a GLI policy’s coverage is wider in scope, it will also typically cost more to purchase.

 

Public Liability

General Liability

Members of Public

Covered

Covered

Personal Injury

Not Covered

Covered

Defective Products

Not Covered

Covered

Misleading Advertising

Not Covered

Covered

Cost

Less expensive

More expensive

Coverage

Less comprehensive

More comprehensive

Where Can I Buy Public Liability Insurance

Public liability coverage has largely been replaced by general liability insurance so it may be difficult to buy PLI. Fortunately, GLI offers the same coverage as PLI and more. Business owners can buy GLI from national insurance carriers, including:

  • Nationwide
  • The Hartford
  • Farmers
  • Chubb
  • State Farm

FAQs

Can you get public liability without a business?

Generally, you will need to have a business to buy public liability insurance because this policy insures a business for claims made by members of the general public.

What can be claimed under public liability?

Public liability insurance provides coverage for claims made by members of the general public related to bodily injury (e.g., a customer slips on a wet floor and breaks their elbow) or property damages (e.g., an employee spills a drink on a customer’s tablet).

Does public liability insurance cover mistakes?

Public liability insurance does not cover professional mistakes made by employees, such as a lawyer providing incorrect counsel or an accountant making a bookkeeping error. Business owners will need errors and omissions insurance for coverage related to errors in professional services.

Key Takeaways

  • Public liability insurance (PLI) pays for claims made by members of the general public when they hold you responsible for their bodily injuries or property damages.
  • An example of a covered PLI claim may include customer injuries after slipping inside your store.
  • Public liability insurance has largely been replaced by general liability insurance, which offers more comprehensive coverage.
  • While there is generally no state requirement for maintaining PLI, having financial protection when unexpected claims arise is always a wise move.

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