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UK Public Liability Insurance - Who Needs It ? 

Being a business owner or employer, it is your legal responsibility towards your customers, employees and the general public. You could be held legally liable and risk being sued if a member of the public or an employee suffers an injury as a result of your breach of duty or negligence. If their claim for personal injury compensation is successful, you may also receive a claim from the NHS for refund of hospital treatment costs (including ambulance costs should it be necessary).

Basically, liability insurance is formulated to pay any compensation and legal costs that might happen if a worker is deemed to be at fault. If you employ even a single member of staff it is very likely that you will need to have employers' liability compulsory insurance (ELCI).

ELCI forces employers carrying out business in the United Kingdom to provide insurance against their liability to their staff for harm or illness sustained whilst in the course of their employment in the United Kingdom. Liability insurance offers greater security to firms against penalties and legal costs which could result in financial difficulty, and to employees that resources will be on hand as compensation even where companies are no longer operating.

How are liability insurance premiums calculated ?

The cost of insurance - normally called the premium - is typically calculated utilising a "book rating". A book rating is worked out by starting with an initial charge, which reflects the insurer's overheads and reflects their desire for your particular type of business - if they are happy to provide cover to your profession, the cost will be less than if they don't.

The premium is then modified to reflect the insurance company's opinion of the level of risk related to a particular profession or industry area.

The policy cost will be adjusted by things such as your claims history, the size of the perceived risk and their estimation on the chance of any claim being lodged against you.

The safer your workplace and the fewer claims you have made, the lower the policy will be.

Premiums also include calculations from other similar businesses by amalgamating both good and bad - a small business with a good record may be adversely affected by this. Your own safety record and approach to risk management can lessen the damage caused by this.

For employers' liability, the exposure risk is calculated on the basis of the number of employees and the size of the payroll. In addition, there are other initiatives that influence how costs are calculated.

For public and product liability the exposure risk is based on the turnover of your company and other items such as whether you carry out your business away from your premises.

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What public liability insurance covers

Public liability covers any damages and costs awarded to someone following an injury or damage to their property or belongings caused by you or your staff. It also insures against any expenses, costs and related legal fees together with charges for hospital treatment (including ambulance costs) that the NHS could claim from you.

Charges vary depending on your line of business, the turnover of the business and how many staff you employ.

Public liability insurance can be a complex product and possible clients should give careful consideration to all of the policy documents to ensure that the product is right for their business.

Even if you work from home, if customers or members of the public meet you there, you should probably think about taking out public liability insurance.

Some businesses, eg riding stables, are required to have public liability insurance. You are also likely to discover that many of your customers or potential customers request evidence of current public liability cover before they will allow you to work for them.

Many self-employed tradesmen or owners of small businesses will discover that there are a variety of products that are designed to their particular trade. These products can be found under a number of labels including business insurance , small business insurance or self employed liability insurance. These policies should include a number of individual parts including employers and public liability, combined with a selection of legal expenses, professional indemnity and office insurance.

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