What is general liability insurance?

General liability insurance is typically how US businesses refer to a type of business insurance that protects against claims of accidental injury, illness, and property damage related to your business activities.

In the UK, it’s often called public liability insurance or product liability insurance, covering various combinations of these risks. Understanding these coverages is crucial for assessing your business insurance needs.

This broad coverage includes protection for third-party claims of accidental injury or property damage. It most commonly covers claims where injuries are caused by slips and trips, or the because of a product you’ve sold.

Public liability insurance

This insurance specifically protects against claims from third parties for accidental injury or property damage. It covers legal fees, compensation claims, and repair costs. While not legally required, it’s recommended for most businesses.

Key features include:

1. Coverage up to £10 million† for compensation and legal costs
2. Protection for incidents occurring on or off your premises
3. Customisable policies based on your occupation and risk factors
4. Tax-deductible premiums

Note: It does not cover employee injuries or damage to your own property, for these you require employers’ liability insurance and contents and buildings insurance respectively.

Product liability insurance

Part of public liability insurance, product liability covers legal fees and compensation if a customer claims injury or property damage from a faulty product you’ve sold them – whether or not you were responsible for actually making that product.

Key points include:

• Coverage limits typically up to £1 million.
• Not legally required, but important for protecting your business from liability related to products you manufacture, sell, or repair.
• Covers property damage and personal injury claims, but not customer dissatisfaction or product recalls.

If your business name is on a product or if you modify it, you should consider product liability insurance.

General liability insurance protects against claims related to bodily injury, illness, or property damage resulting from your business activities. For example, it can cover:

• A customer slipping on a wet floor at your premises.
• Injuries caused by a defective product you sold.

Liability cover helps your business mitigate financial losses from legal proceedings and potential settlements if your business is found liable for an incident.

Coverage levels vary by industry and client demands, typically ranging from £5 million to £10 million† for public liability. It’s worth noting that product liability insurance covers your claims up the level of cover you’ve chosen for public liability as it’s part of this cover.

While lower coverage options may be more affordable, it's essential to consider potential costs in worst-case scenarios, including medical expenses and income loss during business interruptions.

Underinsurance can lead to significant financial burdens if claims arise. 

The cost of liability insurance depends on several factors, including:

• Your occupation and industry

• Business size

• The location of your premises

• Claims history

Insurers assess the likelihood of claims and associated costs, meaning your policy will be tailored specifically to your business needs. Remember, you’re not purchasing a “catch-all” policy, but rather a combination of different liability coverages.

†Not all occupations are eligible for £10 million coverage, the best way to find out which level of cover you are eligible for is to get a quote. Existing customers may want to consult their policy documents.