Public & Employer's Liability Insurance Guide

Public Liability Insurance (PL)

Public Liability insurance covers the cost of compensation and legal fees if a client, customer, or member of the public suffers an injury or property damage because of your business activities.

Is Public Liability Insurance required by law?

No — Public Liability insurance is not a legal requirement under UK law. However, there are important reasons why you should still consider it:

Contractual requirement: Many clients — especially local councils or larger companies — will insist on a minimum level of PL cover before they hire you.
Financial safety net: Claims can run into tens or even hundreds of thousands of pounds. PL insurance protects you from potentially devastating costs.

Who needs Public Liability Insurance?

Self-employed and sole traders: While not legally required, PL is highly recommended if your business interacts with the public, clients, or their property — including tradespeople, mobile hairdressers, consultants who visit client offices, and many other professions. Without it, you are personally liable for claims.

Employees: If you are employed by someone else, you are covered by your employer's PL policy. Freelancers and contractors are effectively self-employed and need their own cover.

How much cover do you need?

There are no legal minimum limits for PL cover. However, a common minimum requirement requested by clients is £5 million. Choose a limit that reflects the potential maximum damage your work could cause.

Real-world examples of Public Liability claims

Builder or plumber: You leave tools on a client's driveway and a delivery driver trips over them, breaking their arm. This could result in a claim for medical costs, loss of earnings, and compensation.

Mobile hairdresser: You accidentally spill hair dye on a client's expensive rug during a home visit. The client could claim for the cost of professionally cleaning or replacing the rug.

Self-employed carer or PA: While helping a client from their chair, you knock over and smash an expensive antique vase. Your Public Liability insurance covers the replacement cost and any legal fees.

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Employers' Liability Insurance (EL)

Employers' Liability insurance covers the cost of compensation and legal fees if an employee suffers an illness or injury as a result of the work they do for you.

Is Employers' Liability Insurance required by law?

Yes — Employers' Liability insurance is a legal requirement under the Employers' Liability (Compulsory Insurance) Act 1969 for most UK businesses that employ staff. Failure to hold EL cover can result in a fine of up to £2,500 for every day you are uninsured.

Who needs Employers' Liability Insurance?

You are legally required to have EL insurance if you employ even one person — including full-time, part-time, temporary staff, trainees, volunteers, and labour-only sub-contractors. If you work entirely alone, you do not need it.

Exceptions — when EL insurance is not required

You are a sole trader employing only close family members (spouse or child — not nieces, nephews, or cousins)
You are a limited company, you are the only employee, and you own 50% or more of the share capital

Minimum cover required

The legal minimum is £5 million, though most insurers offer a standard minimum of £10 million.

Professional Indemnity Insurance (PI)

While Public Liability covers physical damage or injury, Professional Indemnity insurance covers financial losses suffered by your clients as a result of a mistake in your professional work or advice.

Who needs Professional Indemnity Insurance?

PI is essential for consultants, designers, accountants, architects, and any freelancer in a professional services role where your advice or work product could cause financial loss to a client. It is also a regulatory requirement for many professions — solicitors, accountants, and chartered surveyors must hold PI cover to comply with their professional body's regulations.

What does PI cover?

Defending and settling negligence claims
Intellectual property disputes (e.g. accidentally using a licensed image)
Breach of confidentiality from accidental disclosure of client data

Summary: which insurance do you need?

Working alone as self-employed: Consider Public Liability insurance (highly recommended). Add Professional Indemnity if you provide advice or professional services.

Self-employed with employees: Employers' Liability is a legal requirement. Also take out Public Liability, and PI if applicable.

Employee: You are covered by your employer's insurance. No need for your own unless you also do freelance work.

Information correct at time of writing. Always seek professional advice tailored to your specific circumstances before purchasing insurance.

Guide to Public & Employer's Liability Insurance