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How Does Public Liability Insurance Work?

Austin Landes, CIC
5 minute read

If you own a business, you almost certainly have a commercial general liability (CGL) policy. One of the reasons many businesses purchase a CGL policy is to cover public liability, which are legal responsibilities that originate from your ownership in certain property. Here is what you should know about this policy:

What is public liability insurance?

Public liability insurance is a portion of the CGL policy that protects you from third-party claims that originate from an injury on your property. If a member of the public is injured while on your property, this policy would help cover the costs you would incur from that injury. This policy protects against premises liability claims.

Who is covered under public liability insurance?

Public liability insurance covers claims from members of the public who are physically injured on property you own or lease. It does not cover claims from employees, investors, vendors, or independent contractors.

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Public Liability Example

Many businesses have been facing issues with motorized scooter rentals around their property. Bird, Lime, Spin, and other motorized scooter rentals have become increasingly popular in college towns, large cities, vacation destinations, and even in some suburban areas. If someone is injured riding a rental scooter across your business parking lot, public liability insurance will cover it. This is a new risk that most businesses, and therefore most insurance companies, could not have anticipated.

Why would I be liable in the first place?

There are many examples like the one above that might make you wonder why you would be responsible for this type of injury in the first place. It all lies within the law of negligence and the “duty of care” you owe different people.

The Duty Of Care

The duty of care is legal jargon for how you should treat someone. When a person sues for negligence, they are really suing to say you mistreated them.

The law outlines your duty of care for each type of person who may find themselves on your property:

  1. Invitee - A person who comes on to the property, with permission, for the owner’s purposes. A duty of reasonable care (acting as a reasonable person would in the same circumstances) is generally owed.
  2. Licensee – A person who comes on to the property, with permission, for his or her own purposes. (In some circumstances, this permission to enter the property may be implied by the failure to exclude them from your property.) At a minimum, a duty to warn of hidden dangers is usually required.
  3. Trespasser – A person who comes on to the property without permission. In this instance, you typically still have a duty to avoid willfully or wantonly injuring the person.

How do I fulfill my duty to a trespasser?

You will most likely always fulfill your duty to a licensee and invitee—you aren’t going to let people walk into a death trap on your property. The main issue is a trespasser. How do you warn someone of a potential danger, when you don’t even know they are on your property? Best practices dictate that you may want to consider inspecting for and correcting dangerous conditions on your property, as this can help prevent injuries from occurring in the first place. If any defects or potentially dangerous conditions cannot be corrected, at least not immediately, place warning signs or markers to call attention to the conditions.

If your property doesn’t have conditions to warn against, you should, technically, be safe from legal liability. Even if you put up a no trespassing sign, someone could ride the scooter onto your property and fall without warning. How do you prevent that? You really can’t. As long as you ensure that you warn against possible dangers, you should be covered.

The Bottom Line

Even if you do everything perfectly, you may still find yourself getting sued. That is why the best protection is an insurance policy that has your business covered. If you are worried about public liability, give us a call or start an instant quote online, and one of our insurance experts will find a policy to protect your business from the most unlikely incidents.

Austin Landes, CIC

About The Author: Austin Landes, CIC

Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.

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