Public liability insurance covers you if a compensation claim is made against you because you’re legally liable for someone’s injury or for damage to their property.
As well as covering the compensation award, it also covers any legal costs, as well as any other associated costs and expenses. It also covers the claimant’s loss of earnings if they have been unable to work because they have been injured.
Your public liability insurer will defend the claim made against you on your behalf, meaning that you don’t have to worry about dealing with solicitors and complex legal arguments. The insurer will have a fully-trained team that specialises in handling compensation claims.
As with most types of insurance, a public liability insurance policy will usually have an excess. This is the amount of each claim that you are required to pay. Sometimes you can reduce the cost of your insurance premium by agreeing to a higher policy excess.
Public liability insurance isn’t a legal requirement in the same way that employer’s liability insurance is a legal requirement if you employ anyone. However, if you are a member of a professional body having a valid public liability insurance policy in force may be a condition of your membership of that professional body.
The cost of claims
Because compensation claims can be expensive to settle no business should consider trading without public liability insurance.
A minor injury will result in a settlement in the region of £1,000. A more serious injury such as a broken wrist will result in a settlement between ten and twenty times that amount. Some injuries such as spinal injuries can easily result in settlements of £250,000 or more.
Public liability insurance policies contain an indemnity limit. This is the maximum amount that the insurance will pay in the event of a claim.
The standard indemnity limit is £1,000,000, although this can be increased if you pay an additional premium. If you are dealing with high profile clients such as celebrities, it is worth considering an increased indemnity limit to make sure you are fully protected, particularly as in the event of a claim, the lost wages element of the compensation claim could be a significant amount if the claimant is a high earner.
Policy extensions for therapists
A standard public liability insurance policy will cover some of the compensation claims that could be made against a therapist but there will be gaps in the cover. As such, a public liability policy that has been specifically designed for therapists will contain a number of extensions to plug those cover gaps.
The first of those cover gaps is purely economic losses. A standard public liability insurance policy only covers compensation claims if those claims involve an injury or property damage. These policies do not cover compensation claims that involve only economic losses.
Public liability insurance for therapists addresses this issue via a financial loss extension. If someone was unable to work as a result of having been given bad therapy and claimed compensation from you for their lost wages, for instance, the financial loss extension would cover that claim, even though it wouldn’t be covered by standard public liability insurance.
The second of those cover gaps is the professional services exclusion. A standard public liability insurance policy does not cover compensation claims arising out of the provision of professional services. This means that many compensation claims would not be covered because most of what a therapist does is the provision of professional services.
Public liability insurance for therapists includes a treatment risk extension or medical malpractice cover. These two policy extensions provide cover for compensation claims that arise from professional negligence, as well as covering any legal expense costs and associated expenses.