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As a tradesman, you have a certain responsibility to your customers. If you do a bad job, or if an accident happens during a project, you can be held liable for the resulting costs. 

‘Public Liability Insurance’ (PLI) is a type of insurance policy that can cover a business, or even a sole trader, against physical damage claims. In the event of an issue with a customer, a PLI policy can take on most of the resulting costs, preventing you and your business from taking a huge financial hit.

Although having PLI is not a legal requirement, choosing to work without it can be a big risk. Not only could you end up being forced to pay a large amount in the event of a claim from a customer, but it can also limit the number of people willing to hire you. If you were looking for a tradesman to transform your house as part of a huge and expensive project, would you feel comfortable if they were not properly covered?

While it can be difficult to get your head around insurance policies at first, PLI is fairly easy to understand once you know what you need to look out for. Start looking for your policy today, so that you don’t end up regretting it tomorrow!

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Do I need Public Liability Insurance?

Public liability insurance provides a crucial level of protection for businesses in the event of a disagreement resulting from physical damage. On a job, a tradesman may end up causing damage to their client’s property, or the client could become injured. If the client is entitled to claim compensation from their Pro, the tradesman may be forced to pay it out of their own pocket. 

In a situation like this, the Pro could be expected to do more than pay compensation to the customer. Whether or not the customer is successful in their claim, the Pro would also still have to pay to defend themselves in court. If the customer did win, the Pro would usually be expected to pay their legal costs as well.

Needless to say, having to make a pay out like this can be devastating for a small business or sole trader. While you do not legally need PLI, it would be foolish not to get yourself covered.

One reason that you might ‘need’ PLI is for finding work. Hiring an uninsured tradesman for a job is a big risk for a customer, and while some may be willing to pay cash in hand, most high-end clients will demand a certain level of protection.

A standard PLI policy will cover you against:

  • Compensation claims
  • Legal expenses
  • Costs of repairing damage
  • Medical fees

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What do I need for PLI?

Applying for a PLI policy will require you to provide facts and documentation so that an insurer can decide on what kind of coverage will suit you, as well as how much of a risk you are. This will determine what sort of premium you would have to pay in exchange for coverage.

The details you would be expected to provide may include:

  • Name, DOB, contact number and address
  • Details of your (expected) turnover
  • Details of any previous insurance claims
  • Renewal documents from your current insurer
  • The type of business you have or what kind of work you do
  • The size of your business, including the number of employees
  • Whether any claims have been made against you in the past
  • Your health and safety record
  • Your level of exposure to customers and clients

All of this information will help to determine how much of a potential risk you are or how likely you are to have to make an insurance claim in the future. For example, a tree surgeon that does work above a certain height using dangerous equipment may need greater coverage than a bricklayer who works on the ground.

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How to choose a PLI policy

When comparing PLI policies, there are a few key terms that you will need to be aware of:

  • ‘Excess’ - When making an insurance claim, the ‘excess’ is essentially an activation fee. It clarifies exactly how much you would have to pay in order for the insurer to pay out.
  • ‘Premium’ - The amount to be paid for your insurance coverage.
  • ‘Exclusions’ and ‘endorsements’ - These terms refer to what is included in a PLI policy. ‘Endorsements’ are areas which are covered, while ‘exclusions’ are not covered.

You will need to pay close attention to each of these terms if you want to find the best policy to suit you.

To find your ideal PLI policy, you will need to balance the costs of each option against the coverage that it provides. You will need to think of exactly what you require based on the job that you do and the risks involved. There tends to be a lot of variation in what different insurers will cover, which makes it crucial for you to always read potential policies in full.

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Saving money on PLI

There are a few different factors which could help you to get smaller premiums for your PLI policy. However, you should always be aware of false economy savings. By this, we mean short term savings on a PLI policy which may then make it difficult for you to claim the coverage you need in an emergency.

For example, many insurers will offer a higher excess in exchange for lower premiums. While this can seem like a good idea in the short term, it would mean that the policyholder would need to pay more for their coverage if a customer made a claim against them. Similarly, you could find a cheap deal that offers some, but not all, of the coverage you need for your business. While it might seem reasonable to forget about a few of your requirements for the sake of getting a better deal, you will come to regret this later. The immediate savings will seem like chicken feed compared to what you’ll have to pay if you do not have the coverage that you need, when you need it.

Having said that, it can still be possible to lower your premiums. If you ask an insurer, they may tell you that you can reduce the risk that you pose by taking steps to improve workplace safety, secure equipment or give staff training in health and safety.

However, the best way to reduce your insurance premiums will be to play it safe. Premiums tend to be the highest for new businesses, while older businesses with a clean track record will seem like much less of a risk to insure. If you have been covered for a number of years without having to make a claim, insurers will have much more faith in you.

One thing that we always recommend is to shop around as much as possible. Do not rely on a single insurer to give you the best deal and do not be afraid to take your time in comparing your options.