Public Liability Insurance UK Sole Trader: What It Covers and What It Doesn’t

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Usually Bought in a Hurry, Rarely Understood

Someone has probably already told you to get public liability insurance: a client wanting proof before letting you on site, a venue asking before an event, or another sole trader saying it is the first thing to sort.

Most explanations are written to sell rather than inform. This one sets out what the policy actually responds to, what it refuses, how the cover is triggered, and how much of it your clients are likely to demand.

What It Is

Public liability insurance pays out when your business activity injures someone or damages property belonging to someone else, and they hold you responsible.

That is the whole product. It covers the compensation you may have to pay and the legal costs of defending or settling the claim.

Is It a Legal Requirement?

No, not in general. Unlike employers’ liability, which is compulsory under the Employers’ Liability (Compulsory Insurance) Act 1969 once you employ people, nothing in general law requires a sole trader working alone to hold public liability cover.

In practice the market requires it anyway. Larger companies and public sector buyers will not contract without it. Local authorities expect it before granting a market or event licence. Venues, schools, gyms and co-working spaces ask for evidence before letting you through the door. Some trade bodies make it a condition of membership.

Most sole traders buy it because they cannot work without it, not because they have modelled their exposure.

What It Covers

Injury to Other People

The core scenario. A self-employed electrician leaves a cable across a kitchen floor, the homeowner trips and breaks a wrist, and claims for the injury and lost earnings. The policy responds to the compensation and the legal costs.

It is not limited to client premises. A dog in a mobile groomer’s care knocking over a passer-by, or a market stall display falling on a customer, works the same way.

Damage to Other People’s Property

A decorator drops paint on a hardwood floor. A plumber’s drill goes through a wall. A photographer knocks over something irreplaceable at a wedding. The third party claims the cost of repair or replacement and the policy covers it.

The operative word is accidental. Deliberate damage is not insurable.

Legal Defence Costs

Worth separating out, because it surprises people. Defending an unfounded claim still costs money, often thousands in solicitor fees. The policy covers that regardless of whether the claim succeeds, which for many sole traders is the part that justifies the premium.

Products Liability

If you make or supply physical goods, candles, food, furniture, cosmetics, you need products liability. Some public liability policies include it as standard and others treat it as an extension, so check rather than assume.

This matters more than it sounds. Under the Consumer Protection Act 1987, liability for a defective product that causes injury or damage can attach without anyone proving you were careless, and it can attach to a seller as well as a manufacturer in certain circumstances.

What It Does Not Cover

Your Own Tools and Equipment

The policy covers other people’s property, not yours. Stolen tools, a dropped camera or a damaged laptop belong to a tools and equipment policy or your vehicle insurance.

Professional Mistakes

Bad advice that costs a client money is professional indemnity territory, not public liability. A bookkeeper filing figures wrongly, or a consultant whose strategy loses money, is a financial loss claim rather than a physical one.

Public liability responds to physical events. Professional indemnity responds to the quality of your advice or work product. They are different policies and most people who need one eventually need both.

Faulty Workmanship

The important exclusion for trades. If you build a fence and it falls over, the cost of rebuilding it is yours. If the fence falls on the client’s car, the damage to the car is covered.

Consequential damage to third parties, yes. Correcting your own defective work, no.

Your Employees

Public liability covers members of the public and clients, not people working for you. Once you employ someone you generally need employers’ liability insurance, and the detail here matters for sole traders:

• Cover must be at least £5 million with an insurer authorised by the FCA and PRA
• Penalties are up to £2,500 for each day you are uninsured when you should be covered, and up to £1,000 for failing to display or produce the certificate
• There is a family exemption, and it favours sole traders: an unincorporated business whose employees are all close relatives is not required to hold cover. It disappears the moment you employ someone outside that list, and it never applies to a limited company

One trap for trades: labour-only subcontractors, meaning people who work under your direction using your materials, are usually treated as employees for employers’ liability purposes even if they invoice you. Bona fide subcontractors carrying their own insurance are a different case. If you are unsure which you are using, ask your broker before the job rather than after.

Your Own Injuries

You have no employer to claim against. If you are hurt and cannot work, that is personal accident cover or income protection, not public liability.

How the Cover Is Triggered

A detail worth understanding, especially if you have read about professional indemnity.

Public liability is normally written on an occurrence basis: what matters is when the injury or damage happened, not when the claim arrives. If an incident happened while you were insured, the policy that was in force then should respond even if the claim lands years later.

Professional indemnity works the opposite way, on a claims-made basis, which is why it needs run-off cover when you stop trading. Public liability generally does not, though it is worth confirming the wording on your own policy rather than assuming.

Two more practical points. Most policies carry an excess, so check what you would pay on a claim. And almost all require prompt notification of an incident that might lead to a claim, with no admission of liability, so tell your insurer before you tell the other party anything.

How Much Cover

Policies are sold at £1 million, £2 million and £5 million, occasionally higher. Check whether the limit applies to each claim or to the total across a policy year, because those are very different products at the same headline number.

In practice the level is set by whoever is hiring you. Larger commercial and public sector contracts frequently specify £5 million. Local authorities often require £5 million for market and event traders. Some contracts accept £2 million, others £1 million.

Check what your actual and target clients require, and match the highest. If nothing specific is in front of you, £2 million is the common middle ground for lower-risk trades, and £5 million is sensible if you intend to work with larger organisations. The premium difference between levels is usually modest, and losing a contract over an insufficient certificate is an avoidable irritation.

What to Check Before Buying

• Whether products liability is included or an extension
• Whether the limit is per claim or in the aggregate
• The excess
• Whether the cover matches where you actually work: clients’ homes, sites, events, public spaces, or on the road
• Territorial limits, if you ever work outside the UK
• Any exclusions specific to your trade, particularly heat work, working at height, or work on listed buildings

FAQ

Do I need it if I work from home?

If you never meet clients and never visit their premises, your exposure is small. If clients come to you, or you go to them, or you work in public spaces, you need it. Standard home insurance does not cover business activity.

Will my client’s insurance cover me on their site?

No. Their policy covers their liability. If you cause the injury or the damage, you are the responsible party.

Can I buy it as a sole trader without a limited company?

Yes. Public liability is available to sole traders, partnerships and companies alike, with no company registration number required.

Does it cover me across the UK?

Most policies cover England, Scotland, Wales and Northern Ireland, and some extend further. Check the territorial limits if you work away from home, and confirm before any work abroad.

I use subcontractors. Does public liability cover them?

It depends on the arrangement. Genuine subcontractors should carry their own cover, and you should see their certificate. Labour-only subcontractors working under your direction are usually treated as your employees for employers’ liability purposes, which is a different policy entirely.

Public Liability Insurance for a UK Sole Trader: The Bottom Line

It covers injury to other people and damage to their property arising from your work, plus the legal costs of defending a claim. It does not cover your own tools, your own injuries, your own defective workmanship, professional errors, or the people you employ.

For most sole traders visiting client sites or working in public, £2 million is the sensible floor and £5 million is what larger buyers will ask for.

Once that is in place, the next questions are whether you need professional indemnity for the advice side, employers’ liability if anyone works for you, and cover for your own tools. Insurance is not something to buy in bulk, but the gaps between policies are where the expensive surprises live.

This article is general information about insurance in the UK, not advice, and it does not take account of your circumstances. Cover levels, exclusions and legal requirements vary between policies and change over time. Speak to an FCA-authorised broker or insurer about your own position before relying on anything here.