Public liability insurance is one of those costs that confuses a lot of new business owners. It is not legally required in most cases, but it is often contractually required and almost always worth having. The good news is that it is surprisingly affordable for most low risk businesses.
This guide breaks down what public liability insurance actually costs in the UK, what affects the price, and whether you genuinely need it.
Public liability insurance costs between £40 and £200 per year for most low risk businesses. Higher risk trades like construction or events can pay £200 to £1,000+ depending on cover level and turnover.
Costs by Cover Level
Public liability insurance is sold in cover levels, which represent the maximum amount the insurer will pay out in the event of a successful claim against you. The most common levels are £1 million, £2 million, £5 million, and £10 million.
| Cover Level | Low Risk Business | Medium Risk Business | High Risk Business |
|---|---|---|---|
| £1 million | £40 to £80/year | £80 to £200/year | £200 to £500/year |
| £2 million | £50 to £100/year | £100 to £250/year | £250 to £600/year |
| £5 million | £60 to £130/year | £130 to £350/year | £350 to £800/year |
| £10 million | £80 to £200/year | £200 to £500/year | £500 to £1,500/year |
The jump from £1 million to £5 million cover is often surprisingly small. Many insurers charge only £20 to £50 more per year for the higher level, which makes it worth going for £5 million as standard.
Costs by Business Type
What you pay depends heavily on what your business does. An office based consultant and a roofing contractor are not in the same risk category, and their premiums reflect that.
| Business Type | Risk Level | Typical Annual Premium (£5m cover) |
|---|---|---|
| Office based consultant or freelancer | Low | £40 to £80 |
| Personal trainer or yoga instructor | Low to medium | £60 to £150 |
| Photographer | Low | £50 to £100 |
| Cleaner | Low to medium | £60 to £120 |
| Electrician or plumber | Medium | £100 to £300 |
| Builder or roofer | High | £200 to £600 |
| Events company | Medium to high | £150 to £500 |
| Retail shop | Medium | £80 to £200 |
| Restaurant or cafe | Medium to high | £150 to £400 |
What Affects the Price
Insurers look at several factors when calculating your premium. Understanding these helps you shop smarter and avoid paying more than you should.
- Business type and risk level: This is the biggest factor. Higher risk means higher premiums.
- Annual turnover: Higher turnover usually means a higher premium because the insurer assumes more activity means more exposure.
- Number of employees: More people working for you increases the risk of a claim.
- Cover level: The difference between £1m and £5m is often only £20 to £50, but jumping to £10m can add more.
- Claims history: Previous claims will increase your premium. A clean record keeps it low.
- Location: Businesses in London and the South East typically pay slightly more than those in other regions.
- Whether you work on client sites: Visiting client premises or public spaces increases risk compared to working from your own office.
When You Need Public Liability Insurance
Public liability insurance is not a legal requirement for most businesses. But there are several situations where you need it regardless.
You definitely need it if
- You work on client sites or in public spaces
- Members of the public visit your premises
- Your clients or contracts require it (very common with councils, large companies, and the public sector)
- You run events or activities involving the public
- You are a tradesperson working in people's homes
- You sell physical products (product liability is often included)
You might not need it if
- You work entirely from home with no client visits
- You provide purely digital services with no physical interaction
- You are a freelance writer, designer, or developer working remotely
Even in those low risk situations, many business owners buy it anyway because it costs so little and provides peace of mind. At £40 to £80 per year for a basic policy, it is hard to argue against it.
Many councils and larger companies will not work with you unless you have at least £5 million in public liability cover. If you are tendering for contracts or working in the public sector, check the requirements before you buy your policy.
How to Get the Best Price
- Use a comparison site like Simply Business, Hiscox, or PolicyBee to get multiple quotes in one go
- Choose an annual payment rather than monthly installments, which usually add 10 to 15% to the total cost
- Bundle your insurance if you need multiple types (public liability, professional indemnity, employers liability) as combined policies are often cheaper than buying separately
- Review your cover annually and shop around at renewal because loyalty rarely gets you the best price
- Only insure what you need. Do not buy £10 million cover if your contracts only require £2 million
Public Liability vs Other Insurance Types
Public liability insurance is often confused with other types. Here is a quick breakdown of the differences.
| Insurance Type | What It Covers | Who Needs It |
|---|---|---|
| Public liability | Injury to members of the public or damage to their property caused by your business | Any business that interacts with the public |
| Professional indemnity | Claims arising from your professional advice or services being wrong or negligent | Consultants, advisors, designers, accountants |
| Employers liability | Injury or illness to your employees while working for you | Legally required if you have any employees |
| Product liability | Injury or damage caused by a product you sell or supply | Any business that sells physical products |
Public liability insurance is cheap, usually £40 to £200 per year for most small businesses. Go for £5 million cover as standard because the price difference from £1 million is negligible. Buy it even if you think you do not need it, because the one time you do need it, you will be glad you had it.
Frequently Asked Questions
Is public liability insurance a legal requirement?
No, it is not legally required for most businesses. The only compulsory business insurance in the UK is employers liability insurance, and only if you have employees. However, many contracts, landlords, and local authorities will require proof of public liability cover before they work with you.
What level of cover do I need?
For most small businesses, £5 million is the standard recommendation. It costs only slightly more than £1 million cover and satisfies the requirements of most contracts. If you work with large organisations or the public sector, check their specific requirements as some demand £10 million.
Can I get public liability insurance for one day?
Yes. Short term or event specific public liability insurance is available for one day, one week, or one month. Expect to pay £30 to £100 for a single day depending on the activity and cover level. This is useful for one off events, markets, or pop up stalls.
Does public liability insurance cover my employees?
No. Public liability covers members of the public, not your staff. You need separate employers liability insurance for your employees, which is a legal requirement as soon as you hire anyone.