top of page

Public Liability Insurance "Get it wrong and kill your business"

Updated: Aug 29, 2022

Public Liability Insurance

As a student studying business insurance, this was the most challenging subject, and I had to write the exam more than once.

For a business to go through the liability needs analysis really helps to detirmine the risks the business is exposed to. Exciting product for me because it shows off what insurance is capable of.

Let us start with the basics.

What does a public liability insurance policy cover?

Damage to property or death or injury to a person for which you can become legally liable to pay to a third party in connection with you, your employees and even subcontractors in the work of your business.

But now you are going to ask, what is so difficult about that?

A business insurance policy's public liability insurance section has the following exclusions.

Ten times exclusions on the public liability insurance

1) Anything you are working on is excluded from liability insurance.

2) Anything you have worked on in the past is excluded from liability insurance.

3) Any products you supplied are excluded from liability insurance.

4) Any advice you have given is excluded from liability insurance.

5) Your employees are excluded from liability insurance.

6)Damage to property belonging to the insured is excluded from liability insurance

7) Property in custody or control of the insured or any employees of the insured is excluded from liability insurance.

8) Damage caused by any mechanically propelled vehicle is excluded from liability insurance.

9) Food and drink other than the occasional tea and coffee you may supply to customers are excluded from liability insurance.

10) Anything to do with aircraft is excluded from liability insurance.

It is these exclusions that make the public liability insurance for a business so complicated.

Let us go through a physical example and take a business as an example.

In South Africa, hot water geysers are installed between the roofs and ceilings of houses.

Your business is a plumbing company, and you receive the call to go and fix the hot water geyser.

As a plumber, it is your business what you are qualified to do, and you send your employees armed with a brand new geyser and ladders pipes and all the tools they need in connection with your plumbing business.

What can go wrong, and why is public liability insurance correctly structured for your business so important?

Scenario one

A motor accident happened on the way to a site where you are working.

The damage to your property, the client's property that may be on the vehicle and the injury to employees is an exclusion from the liability insurance.

You can solve this with

1) You need a motor policy to cover the vehicle, and possibly third-party liability from the motor accident will be covered by the motor policy.

2) Goods in transit cover the damage to your stock equipment or the client's goods on the vehicle.

3) You must be covered in South Africa for workman's compensation, and you can purchase additional employer's liability insurance to cover employee injury.

Second claim scenario

During the work fixing the geyser, the employees lost their footing inside the ceiling, dropped through the roof, injuring themselves badly, and caused considerable damage to a piece of expensive furniture inside the house.

You lodge a claim to your insurance company, a licenced non-life insurer, and your broker advises you with a red face that you have no cover for any damage.

Why am I not covered, what will it cost to fix the insurance policy and what is the solution?

1) Workman's compensation or employer's liability to cover the injury to the employee.

2) Contractors all risk insurance to cover the damage to the ceiling and the liability for the damaged furniture; this is very comprehensive insurance and recommended for any business that sends employees or contractors to any site to do any work on a customer's premises.

3) Contractors all risk covers the geyser that fell through the ceiling with the employee.

Scenario Three

Exactly one month after you complete the work, you get the call that the whole house is underwater, and there is extensive damage to carpets and furniture.

The client, very upset as you can understand, phoned the plumber and after some threats and spiced language it led to a phone call to me people think our work is selling insurance, but we are problem solvers.

Tell your client to put in a claim from his insurance, and we will prepare ourselves for if and when that insurance will come after you for damages. They will make an assessment, and if they find a reason why it is your mistake, or you can be held liable, they will come after you, which they probably will.

Your client is insured correctly, and although he is agitated, he is happy that his insurance is paying for all the damage.

The client was thrilled his insurance put them up in a guesthouse for a couple of days until the mess got sorted out, and they fixed everything.

We started gathering all the information because the plumber received notification that he was liable for damages and needed to pay.

We notified the insurance company, and the great thing is that if you have a liability policy and are adequately covered, they will appoint a legal team to defend you. So the first thing they will do is see if you are covered. If you are, they will proceed to help you. If not, they will not assist in defending you.

For this benefit alone, it is worth buying proper liability coverage.

This legal matter because the insurance policy says damage for which you become legally liable to pay.

The insurance appointed an assessor to start gathering all the information.

The following extensions and covers must be in place for this claim to proceed.

1) Defective workmanship: If the subcontractor you used at the time made a mistake, you have to cover for all the damage, excluding the actual work that remains your loss.

Insurance does not pay to redo your work.

They asked for the service level agreement and the contract between the main contractor "you" and the subcontractor to state that he needs to take responsibility and asked where the instructions were for him to take out the necessary liability cover. There were none, so he was considered your employee for this job.

2) Products liability if the actual hot water geyser failed and the damage had nothing to do with the work but the geyser fitted. If the geyser fails, the client's legal team can decide whom to sue for injury, and the court will determine who must pay.

3) A tender or service level agreement between you and your subcontractor could have passed on the liability to him.

They determined that the workmanship was poor, the subcontractor did not do his work correctly, and the insurance will settle out of court to indemnify you. I am not a legal expert, but the insurance can go after the subcontractor for the damage.

Questions & Answers

What are all the public liability insurance for my plumbing business needs?


With your business, you need

1) General and tenants liability insurance.

2)Defective workmanship extension to your public liability insurance policy to cover the liability from anything you worked on.

3) Products liability covers liability from any products you provided, either purchased or manufactured.

4) Contractors all risk covering you while you work on the premises.

5)If you give advice, you may need professional indemnity

6) Motor policy covers the public liability that may follow from vehicle use.

7) Employers liability to cover your employees.

8) Legal defence costs.

There may even be more liability covers you need. For example, you may need director's and officer's liability insurance.

Do I need public liability cover for my business?


We know that public liability insurance isn't a legal requirement, but many clients will ask for it before they allow you to begin working. Some trade associations won't register their members unless there's proof of proper coverage and identification, so make sure this is up-to-date!

What is the difference between personal and public liability?


Personal liability refers to the liability you as a person may incur, and public liability is more a term used in business liability insurance.

On your insurance, personal liability gets included if you purchase householder's contents or homeowners insurance.

A basic business policy typically includes a general and tenant's liability cover with no extensions.

What is public liability insurance? (Public Insurance Meaning)


Loss or damage or injury or death to a person you may become legally liable to pay relating to an incident at your premises or a client's premises where you conduct your business. That may be for actions by members, partners, directors, principals or employees or people representing your business.


What is a public liability insurance certificate?


Suppose you are a contractor awarded a tender or get the contract to do specific work. Before starting work, you will be asked for a certificate from an insurance company to prove that you have the liability insurance discussed in this article. If the insurance is in place, they will issue such a document. If your client does not ask for a certificate, it does not mean that you do not need it; beware!

I am an electrician. Do I need electrician public liability insurance?


The answer to your question is yes. The policy will not look different from any other business, but the rates the insurance charge differ from one business to the other. Get somebody to guide you through all the covers you need. It would be best if you had general and tenants liability, defective workmanship, contractors all risk, products liability, employers liability motor and depending on the company size, more policies.

Is there a process to determine what liability insurance is needed?


Download a list of all the covers available from our website.

Get an advisor registered as a financial services provider to assist you with the required questionnaires for the various liability cover.

Get quotations and decide whether the liability coverage is needed or not. Your decision not to take it can lead to a claim against you. (Directors & Officers Liability)

Get some legal advice to find out from which liabilities you can contract yourself out with, for example, a service level agreement between yourself, your client, and subcontractors.

Public insurance costs. Is there a place where I see the prices?


No, no rates get charged according to the industry you are in and the size and history of your specific business. These policies are complicated. Insurance companies use questionnaires to get all the information to do a quote. Get professional help.


The cost of a mistake can be substantial.

The liability insurance premiums can be expensive, and I see how business owners find it challenging to decide whether they should buy the insurance.

For your business to survive a claim, you need to be covered properly, and I would advise a review of your current cover. At least know the risks and costs involved so you can make an informed decision and budget for it in the future.

The problem with insurance is that you can't buy it when needed.

Albert Schuurman

Independent financial services provider since 1999 and have contracts with various insurance companies. AS Brokers cc has representation in Krugersdorp, Centurion Hartebeespoortdam and Roodepoort. We can, with technology, speak to business owners throughout South Africa and assist small, medium and large businesses with comprehensive liability insurance advice.

If you are an accountant or lawyer interested in an additional income stream, please talk to us about a referral agreement. Some of the most significant transactions we did over the years were from such referrals.

Albert Schuurman


bottom of page