Types of Policy

The four main liability insurance policies are as follows:

1. Employers' Liability

Employers' liability (EL) cover enables businesses to meet the costs of legal fees and compensation for employees who are injured or made ill at work through the fault of the employer. By law, all employers must insure for at least £5 million against their legal liability for injury, disease or death to employees sustained by them and arising from their employment. The law also requires that they exhibit a certificate of employers' liability insurance at each place of work.

Employees will normally include, in addition to those under a contract of employment, apprentices and other trainees and those hired from another employer.

2. Public Liability

Public liability (PL) insurance covers you in the event that a claim is brought against you by a member of the public for death, bodily injury or damage to their property which occurs as a result of your business activities. It also covers legal fees, costs and expenses such as representation at any coroner's inquest, fatal accident enquiry or other court hearing because of an accident.

If members of the public or customers come to your premises, or you go to theirs, you should consider taking out public liability insurance. When deciding on how much cover to buy, you should carefully consider the maximum claim that could be made against you. Awards for injury can exceed £1 million, and some claims far exceed this figure.

3. Product Liability

If you make, repair or sell products, you could be held legally liable for damage or injury arising from defects in their design or manufacture - even if you have not been negligent. Product liability insurance will cover you in these circumstances, up to a maximum amount each year.

4. Motor Vehicle Liability

By law you must insure your legal liability arising from the use of vehicles on the road. All UK car insurance policies will include this liability cover.