Public liability insurance is one of the most important types of insurance that a freelancer needs. It covers compensation claims made against you. It’s important because compensation claims can be expensive to settle. They often involve complex legal arguments as well.
It usually includes products liability insurance. There are also a few cover extensions that you should consider because a standard public liability insurance policy might not cover you in certain situations without those extensions.
Compensation claims
You’re legally liable to pay compensation if you do something or fail to do something and someone is injured or their property is damaged as a result.
A compensation claim for a minor injury can easily end up costing over £1,000 to settle because although the compensation awarded will be relatively low, by the time the legal fees and other associated costs and expenses are factored in, the eventual settlement figure will be much higher.
A claim for a more serious injury such as a broken wrist is likely to cost something in the region of £20,000. That figure could be higher if the claimant was unable to work as a result of their injury because you would be liable for their lost wages while they recovered. Claims for severe injuries such as spinal injuries can often cost in excess of £250,000.
Whether you are legally liable to pay compensation depends on a number of factors. You need to have owed the claimant a duty of care, you need to have breached that duty and the injury or damage must have been reasonably foreseeable.
There are many legal precedents that need to be taken into account when deciding whether you are legally liable. Your public liability insurer will have a team that has been legally trained and that can help you deal with any compensation claims that are made against you.
Products liability insurance
Public liability insurance covers you if something you have done or failed to do results in a compensation claim being made against you. However, it doesn’t cover you if the compensation claim is made against you because someone has been injured or their property has been damaged due to a defect in a product that you have sold or supplied.
You can be liable for an injury or damage caused by a product even if you’ve not manufactured the products in question. And although if you’re selling products manufactured by someone else you may well be able to recover any compensation you’ve had to pay from the manufacturer, you’ll have legal costs to pay in order to do that.
Products liability insurance is usually sold as part of a public liability insurance policy and covers this type of compensation claim. If you’re selling or supplying products, it’s something that you need.
Financial loss cover
A standard public liability insurance policy covers compensation claims involving either an injury or property damage. It will not cover a compensation claim if that claim is for a purely economic loss.
You can address this issue by adding a financial loss cover extension to your public liability insurance policy. This extends your insurance so you’re covered even if there’s no injury or property damage involved.
Treatment risk/malpractice
Another limitation in a standard public liability insurance policy is the fact that although it covers compensation claims, it won’t cover claims that arise as a result of professional negligence.
The problem for freelancers is the fact that a lot of what they do is deemed to be professional activities. As such, a lot of what they do wouldn’t be insured by a standard public liability insurance policy.
The treatment risk and malpractice insurance extensions address that. They extend the policy to ensure that you’re covered for compensation claims that arise from professional activities.
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