This clause sets how much the vendor will pay if their software causes physical injury or property damage—for example, if a bug in their system causes your office equipment to malfunction and injures someone. Public liability is different from professional indemnity (which covers financial/professional harm). The level must be high enough to cover realistic injury claims; in the UK, typical public liability insurance is £1–10 million depending on industry. This matters because injury claims can bankrupt a small business, and you need the vendor to share that risk.
Check what public liability insurance the vendor carries (ask for a certificate). Ensure the clause requires them to maintain at least £1 million (UK) or $1 million (US) coverage. If the software is critical to your operations, negotiate for £5–10 million. Don't accept a clause that caps their liability below their own insurance level—that's a sign they're not serious about protecting you.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause sets how much the vendor will pay if their software causes physical injury or property damage—for example, if a bug in their system causes your office equipment to malfunction and injures someone.
Why should I care about this clause?
Public liability is different from professional indemnity (which covers financial/professional harm).
What are my options?
The level must be high enough to cover realistic injury claims; in the UK, typical public liability insurance is £1–10 million depending on industry.
How does this affect small businesses?
This matters because injury claims can bankrupt a small business, and you need the vendor to share that risk.