When it comes to running a business, sole traders such as freelancers, contractors, self-employed professionals, and others face a number of risks that could bring an end to their businesses. As a result, they are required to protect their businesses from such damages, so that’s where sole trader public liability insurance comes in.
This insurance is very important as it helps to cover you against lawsuits related to third-party injuries or property damage, so you can rest easy knowing you and your businesses are protected.
In this detailed article, we will be providing you with every piece of information about this insurance and how you can navigate through it. To begin with, let’s understand what this insurance is all about.
What is Sole Trader Public Liability Insurance?
Sole-trader public liability insurance is a type of insurance that protects self-employed individuals against legal claims made by third parties.
These claims include injuries or damages to property as a result of the trader’s business activities. It’s important to note that this type of insurance does not cover injuries or property damage suffered by the sole traders themselves.
Public liability insurance is often required by law or by contract. For example, many businesses and government bodies require sole traders who work with them to have public liability insurance.
In some cases, sole traders may also be required to have this insurance to get loans from different organizations.
Reasons Why You Need Sole Trader Public Liability Insurance
The following are reasons why you need this insurance policy:
- This insurance is legally required
- It protects your business from legal costs
- Sole trader public liability insurance gives you peace of mind
- It helps attract and retain customers.
This Insurance is Legally Required
Most times, you, as a sole trader, may be required by law to have public liability insurance. This is because a number of government contracts require you to have this type of insurance in order to be eligible for the contract.
In addition to that, some local authorities or professional bodies may want you to have public liability insurance as a condition of membership.
So, if you’re looking to work with the government or join a professional body, you’ll likely need this type of insurance.
It Protects Your Business From Legal Costs
If someone is injured or their property is damaged due to your business, they are likely going to file a lawsuit. Imagine if you didn’t have this insurance; you would be responsible for the legal costs associated with the lawsuit. Isn’t it so?
These costs can be very high, and they could even put your business at risk. But with public liability insurance, the insurance company will cover the legal costs, up to the limits of your policy. So, this is a good reason to have this insurance policy.
Sole Trader Public Liability Insurance Gives You Peace of Mind
The third reason to get public liability insurance is peace of mind. Knowing that you’re covered in case something goes wrong can be a huge relief for sole traders.
Therefore, you don’t have to worry about the financial burden of a claim, which can be very stressful. It also allows you to focus on your work, knowing that you’re protected if something goes wrong.
It Helps Attract and Retain Customers.
When customers know that you have this type of insurance, they may be more likely to choose your business over a competitor that doesn’t have it.
Also, it can help you keep your customers happy and coming back for more. They’ll know that you’re taking steps to protect them, which can increase their loyalty to your business.
What to Consider When Choosing a Sole Trader Public Liability Insurance
The following are things you need to consider when choosing this insurance:
- Size and type of business
- Reputation of insurance company
- Cost of policy
- Customer service
- Claims history
- Coverage limits.
Size and Type of Business
If you have a small business, you may not need as much coverage as a larger business. But if you have a big business, you may need more comprehensive coverage. Can you now see that the type of business you have is also important?
Look at this example: a business that manufactures products may need product liability insurance, while a business that provides professional services may need professional liability insurance.
Reputation of Insurance Company
When seeking to purchase this insurance policy, it’s important to choose a company with a good reputation.
You can use insurance comparison sites to do your research and read reviews from other customers to get an idea of their reputation.
Cost of Policy
The cost will vary depending on the type of policy and the amount of coverage you need. That’s another reason why you should get quotes from multiple companies so that you can compare different prices.
Always bear in mind that the cheapest policy may not necessarily be the best option.
When choosing a company, you should consider how easy it is to reach them and how helpful they are when you need help. Some companies have 24/7 customer service, while others only have limited hours.
Also, there is a need for you to consider whether the company has a dedicated team of customer service representatives or if you will be dealing with a call center.
In essence, the level of customer service can make a big difference in your overall experience with the company.
You must consider the company’s claims history to get an idea of how well it handles claims.
There are various online platforms, like Better Business Bureau and many more, where you can look up different companies’ ratings and reviews to see what people are saying about them.
If possible, you should try to find out how long it takes the company to pay out claims on average. This will give you an idea of how quickly you can expect to be reimbursed in the event of a claim.
The coverage limit is the maximum amount of money the insurance company will have to pay out in the event of a claim.
Different policies have different limits, so you need to make sure the policy you choose has a limit that is high enough to cover your needs.
You should also consider the deductible, which is the amount of money you will have to pay out of your pocket before the insurance company starts to pay for a claim.
Things That are covered in Sole-Trader Trader Public Liability Insurance
This insurance covers three main aspects. They are:
- Bodily injury
- Property damage
- Personal injury.
This covers medical expenses and lost wages if someone is injured on your property or as a result of your business activities.
For example, if a customer slips and falls on your property and breaks their leg, this type of coverage would pay for their medical bills and any lost wages if they are unable to work while they are recovering.
In this coverage, there are a few key things you have to keep in mind. One of them is that the damage has to be caused by your business or your employees.
Another one is that the damage must be accidental and not intentional. Let’s consider this real-life example: if your delivery truck hits a parked car, that would be covered under property damage coverage.
However, if your delivery truck driver intentionally hits a car, that would not be covered. It’s clear now, right? Okay, over to the next.
Personal injury coverage is a bit more complicated. This type of coverage covers two main areas: slander and invasion of privacy.
Slander covers false statements that can harm someone’s reputation. For example, if you write something untrue about someone on social media, that could be considered slander or libel.
Invasion of privacy covers situations where someone’s privacy is violated. For example, if you take a photo of someone without their permission and post it online, that could be considered an invasion of privacy.
Things That Are Not Covered in Sole-Trader Trader Public Liability Insurance
Several things are not covered under sole trader public liability insurance. These include:
- Damage to your property
- Intentional damage caused by you or your employees
- Fines and penalties for breaking the law
- Intentional acts of violence or terrorism.
Damage to Your Property
This type of damage is not covered because the purpose of public liability insurance is to protect you from claims made by other people.
For example, if your building catches fire, you would not be able to claim on your public liability insurance policy.
Instead, you would need to have a separate policy, such as property insurance, to cover the damage to your building.
Intentional Damage Caused by You or Your Employees
This is not covered by your insurer because it’s considered to be deliberate. However, there are some exceptions to this rule. Let’s assume your employee accidentally starts a fire while trying to do their job. Wouldn’t that be considered an accident? Yes, it would.
But what if your employee sets the fire on purpose? Would it still be covered? Well, that’s a straight no. So, that is why it’s important to understand the difference between accidental and intentional damage, so you can easily distinguish between what is covered and not covered.
Fines and Penalties for Breaking the Law
These are not covered because they are not considered to be a result of negligence. Let’s say you are caught speeding and required to pay a fine.
Intentional Acts of Violence or Terrorism
If you were to commit a violent crime or participate in a terrorist act, your policy would not cover you.
This is true even if you are not found guilty of the crime. The reason for this is that insurers do not want to encourage violent or terrorist behavior by providing coverage for these acts. It’s a sad reality, but it’s one that we all have to face.
How to Choose the Right Policy
Here’s a step-by-step guide for you to choose the right sole trader public liability insurance policy:
- Assess your business’s needs and determine the level of coverage you need
- Shop around and compare quotes from different companies. You could use online comparison platforms
- Read the fine print and make sure you understand the policy’s exclusions
- Choose the policy that best meets your needs and budget
- Review your policy periodically to make sure it still meets your needs.
FAQs on Sole Trader Public Liability Insurance
What is sole trader public liability insurance?
Sole trader public liability insurance is a type of insurance that covers you if someone is injured or their property is damaged because of your business.
What does sole trader public liability insurance cover?
It covers legal costs, compensation payments, medical expenses, and the like.
What does sole trader public liability insurance not cover?
It does not cover intentional damage, damage caused by natural disasters, or damage that is covered by other insurance policies.
Do I need sole trader public liability insurance?
Most businesses need some form of liability insurance, but it's best to talk to an insurance professional to find out what's right for you.
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sole trader public liability insurance is a must-have for any sole trader or self-employed person. This is because it can help protect you from legal and financial ruin if someone is injured or their property is damaged because of your business.
Don’t wait until it’s too late. Go get insured today.