Public Liability Insurance: What It Covers, Minimum Levels & Checking Policies

Summary

Public liability insurance is the most fundamental business insurance for any tradesperson. Without it, a single claim for accidental property damage or personal injury could bankrupt a sole trader. A flooded kitchen from a plumbing error, a fire from faulty electrical work, or a customer tripping over your tools can all result in claims that run into tens of thousands of pounds — and sometimes much more.

Despite its importance, PL insurance is frequently misunderstood. Many tradespeople do not know their indemnity limit, do not check whether their policy covers the specific work they do, and assume a cheap policy is equivalent to a comprehensive one. They are not. Policy exclusions vary enormously between insurers, and discovering an exclusion after a claim is made is extremely costly.

For tradespeople who work for contractors, housing associations, local councils, or commercial property managers, a certificate of insurance with specific minimum limits is usually required before you are allowed on site. Keeping your certificate current and understanding what your policy covers is therefore not just about protection — it is a prerequisite for accessing certain types of work.

Key Facts

• PL insurance — covers third-party bodily injury and property damage claims arising from your business activities
• Employer's liability (EL) — legally required if you employ staff; minimum £5 million (Employers' Liability (Compulsory Insurance) Act 1969) [verify current minimum]
• Standard domestic indemnity levels — £1m minimum; £2m typical; £5m often required
• Commercial/public sector minimum — typically £5m PL + £10m EL required by specifications
• Does NOT cover — your own property, faulty workmanship rectification costs (typically), consequential loss (unless specifically included)
• Trades-specific policies — multi-trade policies exist; confirm all your trades are listed
• Run-off cover — important if you retire or close the business; covers claims made after you stop trading for work done while trading
• Claims-made vs occurrence policies — occurrence-based covers incidents during the policy period regardless of when claimed; claims-made requires active cover when the claim is made
• Excess — typically £250–£500 on domestic PL policies; higher on commercial policies
• Professional indemnity — separate from PL; covers design or advice errors (see professional indemnity)
• Tool insurance — separate from PL (see tool insurance)
• Check annually — policies change; check coverage, exclusions, and limits at each renewal

Quick Reference Table

Detailed Guidance

What PL Actually Covers

A standard public liability policy for tradespeople covers:

Bodily injury to third parties: If a customer, member of the public, or any other person (not an employee) is injured as a result of your work or activities, PL covers your legal liability. Example: a customer trips over your tool bag and breaks their wrist.

Property damage to third parties: If you accidentally damage a customer's property, their neighbours' property, or any other third party's property, PL covers the claim. Examples: drilling through a pipe and flooding a flat below; scratching a customer's worktop; a dropped tool damaging a car.

Legal costs: The policy covers the cost of defending a claim, not just the settlement. Legal costs can exceed the damage claim itself in complex cases.

What is not covered (common exclusions):

• Damage to property you are working on — the actual thing you are repairing/installing is not covered. If you crack a tile fitting a new shower tray, PL does not pay for the tile. You must fix this yourself.
• Faulty workmanship claims — if a customer claims your work was simply not good enough (without consequential damage), most PL policies do not cover this. Some specialist policies include "faulty workmanship" cover for consequential damage.
• Your own property — tools, van, and equipment are covered by separate policies.
• Contractual liability beyond legal liability — if you agree in a contract to take on liability greater than you would have at law, this extended liability may not be covered.
• Deliberate acts — intentional damage is excluded.
• Pollution and contamination — often excluded or very limited; check if relevant to your work.
• Asbestos — almost universally excluded from standard PL policies; specialist cover required.
• Professional advice — covered by professional indemnity (PI) not PL.

Reading Your Certificate of Insurance

Your insurer will provide a certificate of insurance (or schedule). Key things to check:

1. Policyholder name and trading name — must exactly match what you use commercially
2. Indemnity limit — confirm it meets any contractual requirements
3. Policy period — check it is current; an expired certificate is worthless
4. Covered activities/trades — all your trades must be listed; if you have added trades since taking the policy, notify the insurer
5. Territorial scope — most UK policies cover work in the UK; check if you ever work in Ireland or elsewhere
6. Excess — know your excess before a claim; you may need to have it readily available

Many contractors will ask for your certificate before allowing you on site. Keep a digital copy on your phone and have a paper copy in your van.

Employer's Liability Insurance

EL insurance is compulsory under the Employers' Liability (Compulsory Insurance) Act 1969 for most businesses that employ staff. The minimum cover is currently £5 million [verify — some sources quote this, though in practice most insurers offer £10m as standard].

Who counts as an employee for EL purposes? The definition is broader than you might expect. HMRC's employment status test is NOT the same as the EL insurance test. Even labour-only subcontractors who you control and direct may be considered employees for EL purposes if they:

• Work primarily for you
• Do not supply their own materials
• Cannot send a substitute
• Work under your supervision

When in doubt, include them in your EL declaration. The premium increase for adding one additional worker is small; the uninsured liability is unlimited.

EL certificate display: Employers must display the EL certificate at each place of work, or make it available electronically. HMRC inspectors and HSE can request to see it.

How to Check Another Contractor's Insurance

When working with subcontractors or checking a contractor's cover:

1. Request the current certificate of insurance (not last year's)
2. Verify the policy period covers the work period
3. Check the indemnity limit meets your contract specification
4. Check the trades listed cover what they'll be doing
5. For significant projects, consider requesting direct confirmation from the insurer

Accepting a photocopy of an old certificate is not adequate. Some fraudulent certificates circulate — if in doubt, call the insurer directly to verify.

Getting the Right Policy

Key questions when taking out or renewing PL insurance:

• Does the policy cover all the trades I undertake? (list all, including any gas, electrical, or structural work)
• Does it cover working at height? To what height?
• Does it cover work on occupied premises?
• Does it include cover for damage to data and cables? (increasingly relevant)
• Is there any exclusion for contract penalty clauses?
• Does it include products liability? (for materials you supply)
• Is there run-off cover available if I stop trading?

Trade associations (Gas Safe, NICEIC, FMB, RMI) often offer group insurance schemes with preferential rates and coverage appropriate to member trades. These are worth comparing against commercial policy providers.

Frequently Asked Questions

I'm a sole trader with no employees. Do I need EL insurance?

Only PL is legally required if you genuinely have no employees, labour-only subcontractors, or other workers under your control. However, check whether any labour-only subcontractors you use might be classified as employees for EL purposes — if so, EL is required. Some PL policies automatically include £5m EL even for sole traders — read your policy schedule.

A contractor is asking for £10m PL. Is this standard?

For public sector, local authority, and large commercial contracts, £10m PL is increasingly standard. Smaller domestic-focused tradespeople rarely need this level. If you want to access this type of work, you will need to upgrade your policy — the premium difference between £2m and £10m is typically modest (perhaps £50–£150/year extra).

My PL policy is cheap — how do I know if it's adequate?

Check the policy schedule carefully, particularly the list of exclusions. A cheap policy may exclude exactly the type of work you do most (e.g. excluding gas work, electrical work, or work over a certain height). Read the policy document — not just the marketing summary. If in doubt, take the schedule to an insurance broker who specialises in trade insurance for an independent assessment.

Am I covered if I accidentally start a fire that damages a customer's house?

Provided the fire was accidental and resulted from your work activities, yes — your PL policy would respond. This would typically be one of the highest-value claims a tradesperson might face. Check your policy for fire-related exclusions. Note: if the fire was caused by deliberately leaving an unsafe situation (e.g. unprotected hot work near flammables), the insurer may refuse to indemnify on the grounds of recklessness.

What is products liability and do I need it?

Products liability covers claims arising from products or materials you supply, as opposed to services you provide. If you supply materials to a customer who subsequently uses them themselves and something goes wrong, or if materials you fit are defective, products liability may be relevant. Most comprehensive trade PL policies include products liability as standard. Check your policy schedule.

Regulations & Standards

• Employers' Liability (Compulsory Insurance) Act 1969 — requires all employers to hold EL insurance; minimum level £5m [verify current]

• Employers' Liability (Compulsory Insurance) Regulations 1998 — certificate display requirements

• Health and Safety at Work etc. Act 1974 — duty of care underlying PL claims

• Unfair Contract Terms Act 1977 — limits on exclusion clauses in insurance contracts

• Insurance Act 2015 — fair presentation of risk; you must disclose all material facts to insurer

• Association of British Insurers — Public liability explained — Industry overview of PL insurance

• HSE — Employers' liability insurance — Legal requirement guidance

• British Insurance Brokers' Association — Find specialist trade insurance brokers

• Federation of Master Builders — FMB Insurance — Member scheme for builders

• professional indemnity — Professional indemnity for design and advice work

• tool insurance — Tool and equipment cover

• competent person — Trade association membership that typically includes insurance requirements

• working at height — Risk management affecting PL claims