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Contractual Requirements: Why Tradesmen Often Need Public Liability Insurance

Rhino Trade Insurance 20 September 2023

Public Liability Insurance is an important policy for tradespeople. It offers financial protection against third-party claims and shields trades businesses from all sorts of legal liabilities. Not having it in place will cost you jobs, especially in cases where you need to sign a contract before getting on board.

Let’s take a look at what Public Liability Insurance is, what its benefits are, why tradesmen need Public Liability Insurance and why it’s usually a contractual requirement for trade work here in the UK.

Understanding Contractual Requirements for Tradesmen

Why do tradespeople need contracts?

Some types of trade work require you to sign a contract before starting. The most common example of this is construction work, where a contract is usually drawn up between the customer (the hiring party) and the contractor responsible for carrying out the work, as well as other parties like architects, consultants and subcontractors. The contract is written before the work starts and will set out the particulars of the project, including the timeframe and conditions to be met by all parties.

The purpose of the contract is to ensure that everyone is on the same page before the work begins and to avoid disputes and misunderstandings down the line. 

What is included in a contract?

A standard contract for a privately funded (carried out for a private customer or organisation as opposed to funded using public money) project between a construction contractor and customer includes details of: 

  • The work – details of the project to be carried out
  • The price – details of the costing
  • The timeframe – the expected completion date and schedule
  • The payment – details of when and how the money will change hands
  • Insurance obligations – all parties must check they adhere to requirements

In the UK, there are standard contract templates which cover a variety of different project types and sizes based on the Joint Contracts Tribunal (JCT) form. These are based on UK contract law and state that the contractor must have Employer's Liability Insurance (if applicable), Public Liability Insurance and often contract works insurance too, including cover for the contractor's equipment.

Exploring the Role of Public Liability Insurance

Public Liability Insurance is an important policy which is one of the main contractual requirements for tradesmen, and for good reason. But what exactly is it?

Definition of Public Liability Insurance

Public Liability Insurance is a policy designed to protect a business against claims made by members of the public, including customers, for injury or property damage that was caused by the policyholder during their business activities. 

When a public liability claim is brought against a business or self-employed individual for injury or property damage, the costs of the claim will fall to the business or individual to settle. With Public Liability Insurance, the insurer will bear the cost of the claim instead. These claims can be very expensive – which is why Public Liability Insurance limits of indemnity range from £1M to £10M.

Coverage provided by Public Liability insurance policies

Public Liability Insurance covers the cost of a claim against your business – whether you’re a sole trader or limited company. Costs covered by Public Liability Insurance include:

  • The claimant’s medical bills
  • Repairs or replacements for damaged property
  • Legal fees, including solicitors’ fees and court costs
  • Compensation for loss of earnings
  • Compensation for distress and inconvenience caused
  • Compensation to a victim’s family in cases of accidental death

Why Tradesmen Often Need Public Liability Insurance

Tradespeople and Public Liability Insurance go together like curry and an ice-cold pint. But why are tradespeople particularly in need of this type of cover?

Protecting against third-party claims and legal liabilities

Trade work is known to be riskier in nature than many other types of work in the UK. No matter how careful they are, a plumber, electrician, bricklayer or scaffolder faces more hazards in an average week than most professions do in a whole year.

Therefore, the likelihood of something going wrong and resulting in a liability claim during trade work is so high that Public Liability Insurance is especially important for tradespeople.

Meeting contractual obligations

As previously mentioned, it’s almost always a contractual requirement of any type of trade work that you have Public Liability Insurance in place. Often, a contract will require you to hold other types of trade insurance too, such as Professional Indemnity Insurance, Contractors All Risks Insurance or cover for your equipment. 

If a contract doesn’t mention Public Liability Insurance, you should consider whether it’s even legitimate and whether you want to take on the work.

The Benefits of Having Public Liability Insurance

What benefits does having Public Liability Insurance bring to a tradesperson?

Financial protection for accidents, damages, and injuries

This is the key benefit of holding Public Liability Insurance. This policy could save you thousands, tens of thousands or even millions of pounds if you accidentally or negligently cause harm to a third party or their property while you’re working. 

Even if you’re not seeing customers regularly, don’t think you can do without cover. Anyone who is self-employed and comes into any contact – no matter how briefly – with members of the public (that includes customers and people working for other businesses such as suppliers) needs Public Liability Insurance. So, even if you don’t deal with customers directly, or only occasionally encounter members of the public, it’s still very important that you’re covered with Public Liability Insurance. 

Enhancing professional reputation and credibility

The second main benefit to holding Public Liability Insurance is that it boosts your professional reputation. Holding this insurance tells potential customers that you’re serious about your work and have the means to pay up to put things right if an adverse situation arises.

Not taking out Public Liability cover might save a tradesperson a few quid a month, which is too tempting for some tradespeople just starting out. But everyone knows this is a false economy, and doing this won’t reflect well on you and your business.

And finally…

The importance of Public Liability Insurance for tradesmen is something that can’t be overstated. If you want to be taken seriously in your industry, and want to win more work while protecting yourself from potentially huge costs and legal liabilities, then Public Liability Insurance is something you’re going to need.

Luckily, you’re in the right place. Amazing, low-cost and fixed excess Public Liability Insurance is just a few clicks away. At Rhino, we specialise in trade insurance, and we provide thousands of UK tradespeople with their Public Liability coverage every year.

Get in touch with the friendly, expert Rhino team today by giving us a call on 0116 350 1552 or check out our online quote engine to see a tailored insurance solution for your unique business needs.

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