Sole traders or self employed individuals may not feel there is a need to arrange public liability insurance.

In a way they are correct, under UK law you are not required to arrange third party liability insurance except in relation to motor insurance. You do need to have employers liability, if you employ anyone, but as far as public is concerned you can trade to your hearts content without having a policy in place.

But, if you stop and think about it, this is very foolish. As a sole trader, you have none of the financial protection for your own personal assets that you would have through a limited company. If you damaged someone’s property and they sued you, everything you own is potentially at risk. The UK has become increasingly litigious and it is much easier for Joe Public to access legal advice.

So, the sensible, prudent option is of course to get some cover. You can either get a basic policy that just provides the public liability, or you can get a commercial liability insurance policy that includes employers and products as well.

Many insurers offer a simple tradesmens (yes, they have not realised yet that it should be tradespersons) package policy. If you do arrange one for public only, then it would normally include products liability as long as this is part of an overall contract. What this means is, for example, a plumber may supply and fit a complete bathroom suite. If the shower breaks and causes damage, through a fault in the manufacture, then the plumbers public liability would not pick this up. This should be product liability. Most policies will exclude this cover if you are selling items separately.

If you are not only doing supply and fit, but supply as well, this is where you need a combined liability policy.

The simple answer is to seek professional, independent advice from a business insurance broker and they won’t mind because they are looking for insurance sales leads. They will know what policy is best for your needs. As an idea, in 2010, for a £1,000,000 public liability limit of indemnity on a trade that does not use heat (ie blow torches etc), for example a carpenter, the annual premium would be £105.00 for one person. Higher risk, worse claims and more staff means higher premiums.

Watch out though for increased third party property damage excesses. It is simply not worth saving £10 or £20 on your premium if the excess if £1,000 instead of £250. Again, this is where the broker will help you as they are obliged to offer you the best quote and cover available from their panel of insurers.