Public Liability
Help Sheet

Abbott
Insurance

We are often asked detailed questions about what is covered and what is not covered under the Public Liability section of business insurance. This help-sheet gives an overview and a few example questions to help explain.

Insurance Dictionary Definition.

But this doesn't really tell us everything in practical terms or as it applies to the typical business policy. There are two main areas that regularly come up in discussion with clients:

• damage to the property being worked on
• the difference between public liability and professional indemnity

Damage to "property being worked on" is generally excluded.

For example, if a cleaner is washing the glass shower cubicle and breaks the glass, this is not covered. However, if they are washing the hand basin and their mop falls over, breaking the glass - that is covered.

If a joiner is fitting a kitchen cupboard and drops it, this would be classed as 'property being worked on' and would not be covered. This would probably be excluded under other clauses - see below.

Fortis Semploy Policy Exclusion states "liability for property being worked upon where the damage is a direct result of the work undertaken"

Professional Negligence is not covered under a standard Public Liability section. Public Liability is for Accidental injury, damage to property and a few other more niche conditions.

The onus is on the policyholder to prove a claim results from an Accident and not from their professional negligence.

A typical question that has been asked many times: "If I put a nail through a wall and damage the electrics or burst a pipe causing a flood, is that insured?" The answer is not straightforward. The insurer will want to determine if it can be classed as an accident. If the client can prove they took all available precautions; testing for hidden services, checking the construction drawings, asking the client and so forth, they may be able to show this is accidental. If there is no supporting evidence, and the client is shown to be cutting corners or 'taking a chance' then the claim would not be paid.

There is an example of a fitter putting the wrong length of nails in a nail gun, which caused the nails to pass through the wood to burst the pipes below. That claim was rejected by the insurer as "Professional Negligence" and not an Accident.

It is not always easy for clients to define the required limit of indemnity. £1M is now the practical minimum that covers most 'low-risk' cases. However, this can be insufficient for three main reasons:

• the client has a contractual obligation to have a higher limit
• the client is a member of a trade or professional body that requires higher levels of cover
• the client works for a local authority: Fife, Perth & Kinross and Lothian insist on £5M.

Ref:
Fife Regional Council Risk Management Department, 01592 414141, 18th December 2003
Perth & Kinross Council, Bill Wilson, Risk Management Services, 01738 475519, 18th December 2003

All insurance is a contract of "Utmost Good Faith". This means that any information supplied must be complete, accurate and not misleading. All "material facts" must be disclosed and any event likely to give rise to a claim must be notified immediately.

Full details of what is, and is not, covered will be explained during the pre-commitment phase of arranging insurance.

The field of General Insurance is detailed, complex and subject to many regulations. Due to the rapidly changing nature of this business, the information presented through this Help Sheet should only be used as a guide.

Whilst we take care to ensure the quality of the information presented, the Help Sheet is presented without warranty or obligation.

For full and up-to-date advice, please contact our experts.

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