There is a simple answer to this question, but first we will discuss what public liability insurance is, and for what it is used. Wikipedia, along with many other authorities on insurance, defines this type of policy as coverage that comes into effect when a third-party files a legal claim against your company, due to negligence or failure to meet expectations.
Public liability is commonly confused with general liability. These are two completely different aspects of business insurance. Liability insurance covers you against any type of injuries that may be sustained by a third party. For example, if someone falls in your parking lot and gets injured, general liability insurance will cover medical and healing costs. As well as any damages that they sue for.
On the other hand, if a person hires you to advise them on investing in stocks and they lose a ton of money, public liability insurance would cover any lawsuit that gets filed against you. Another example would be if you sell a product, such as radio, and it causes a fire due to a product flaw, you could be held liable for damages. Once again, public liability insurance would step up and pay suit.
If you in turn sue the manufacturer to reclaim the costs, they would also use their public liability insurance. Obviously, since the manufacturer is at fault, they would pay the original suit through the insurance companies. This is simply an example to help you understand how it works.
The best thing about the scenario above is that you will have very little to do with the suit. The insurance company that you have a public liability insurance policy through will work with the insurance company of the supplier. You may have to make statements since you more than likely had to talk with the customer at the beginning of the claim.
One main thing that you need to keep in mind is that public liability is not a legal requirement. You do not have to secure this type of policy to operate a business. Many owners choose not to obtain this type of policy because they have little to no contact with the public. Owners base their decisions on where they are located, what they do, and if they have face to face contact with the public.
You must realize, though, that even if you own a freelance writing company that offers advice on building a shed, for instance, you could be sued. You may think that since it is an article, or blueprint, that the public could not hold you responsible for any injuries or damage.
Have you ever read in the front of books the clause stating that the information is for reading purposes only? The public can, and will, file a suit against you if your advice causes an accident due to inaccurate information. It does not matter if your article is based off research from others. Your name is on the writing as the author, so you will be the target of the claim.
The bottom line, easy answer to the question asked in the title is “YES.” If you own a business, you should have public liability insurance. The more public contact you have, the higher the coverage should be. Every company will have contact with the public in one way or another.
You have spent a lot of time and money getting your business up and running. You continue to work hard and do everything possible to keep your consumers happy. Regardless, eventually you could have a claim filed against you. If you choose not to carry a public liability policy, you will be required to pay the suit out of your own pocket. Most of the time, this can reverse all your hard work, and possibly cause you to file bankruptcy.