What is Public Liability Insurance?

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Published on LexisPSL on 24/07/2017

The following Insurance & Reinsurance Q&A provides comprehensive and up to date legal information covering:

  • What is Public Liability Insurance?
  • Nature of public liability insurance
  • (i) Legal liability
  • (ii) To a third party other than an employee
  • (iii) Damages/compensation
  • (iv) For death etc.
  • (v) In connection with…
  • Form

What is Public Liability Insurance?

Nature of public liability insurance

Public Liability insurance covers the assured’s liability to the public at large. Typically, it covers sums which the assured: (i) becomes legally liable to pay (ii) to any third party other than an employee (iii) as damages or compensation for (iv) death and personal injury, property damage or interference with certain property rights (v) happening in a specified context.

Public Liability insurance is not statutorily compulsory but is plainly a sensible precaution if the assured’s activities are likely to give rise to claims or if its ability to satisfy claims is limited. Accordingly, many companies take out a combined business insurance policy which includes Public Liability, Employers’ Liability and Products Liability insurance. Likewise most domestic household policies routinely include an element of Public Liability insurance.

(i) Legal liability

The policy only responds to legal liability. Ex gratia payments or sums paid for commercial expediency are not covered.

The underlying purpose of the policy (as demonstrated by the nature of the risks insured) is to cover tortious liability in negligence, not general contractual liability. Liability arising only in contract is generally excluded unless there is a parallel tortious duty.

(ii) To a third party other than an employee

Liability to employees is invariably covered separately by compulsory Employers’ Liability insurance.

(iii) Damages/compensation

Whether exemplary or punitive damages are covered depends on the wording of the

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