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Running a business can be tough work. It takes long hours and extensive planning to safeguard your business’ growth and ultimate success, and you don’t want to be left blindsided by the unexpected. Public liability insurance is one of the most important considerations you should have when starting up or running a business.

barista serving customer

What is public liability insurance?

Business owners have a duty of care to any third party that comes into contact with their business and its activities, including customers, contractors, and other members of the community. This means you hold a legal obligation to take reasonable action to help avoid third party injury, death, loss, and property damage. Consequently, businesses open to the public are particularly vulnerable to these types of incidents, which can result in costly public liability claims.

This is where public liability insurance helps protect you and your business. With the right level of cover for your business’ needs, you can avoid crippling litigation fees and create a safer business environment, while continuing its day-to-day operations.

What does public liability insurance cover?

Your business’ type and size directly affects the level of public liability insurance you require. For example, a rock climbing business holds an inherent risk of injury to clients. These business owners would need a greater coverage of public liability insurance and will generally pay a higher premium.

Conversely, a florist may face a smaller risk and therefore only require a smaller level of coverage. While not a legal obligation, it is strongly suggested you purchase the correct amount of public liability insurance for your business.

Public liability insurance typically covers:

  • Loss or damage to property: This includes covering the loss or damage to a third party’s property (i.e. a laptop) that was in your control or care custody. This also covers a third party’s property if it is damaged while performing your service, as well as the loss or damage of goods in your car.
  • Legal costs: These costs may arise from the defence or settlement of a claim.
  • Injury to a third party: This includes third party injury while visiting your business. Public liability insurance also covers first aid expenses during the injury occurrence.
  • Others acting on your behalf: This includes covering workers who may be acting on behalf of your business during the incident.

It is important you check the coverage inclusions within a policy’s Product Disclosure Statement (PDS).

What doesn’t public liability insurance cover?

Before taking out public liability insurance, be sure to understand what is and isn’t included in your public liability coverage. Typical exclusions include:

  • Your responsibility for injured workers: This is covered through worker’s compensation insurance.
  • Punitive damages: The extra damages awarded if a judge believes your behaviour was exceedingly negligent.
  • Product recall: Expenses that arise when products are recalled from the market.
  • Gradual pollution: Including leaking pipelines, or underground storage tanks causing groundwater contamination. This is typically covered under an environment impairment insurance policy or pollution liability policy.
  • Asbestos: This includes incidents involving asbestos materials. This is typically covered under asbestos liability insurance.
  • Aircraft products: Typically covered under different levels of aviation insurance.

Whether you’re operating your business in QLD, NSW, or any other state within Australia, it’s important you check for any state-specific public liability requirements with your insurer.

Why do you need public liability insurance?

Although it is an added expense, public liability coverage is one bill that may save your business from coming to a halt. From something as common as a customer’s slip and fall, to accidently knocking your coffee over a client’s laptop, accidents can happen.


Case Study: Slip and Fall

A particular example comes from Gerard Malouf and Partners, a leading law firm that worked on a trip and fall claim. This specific case, which came before the NSW Supreme Court, involved a woman who was paid $300,000 in compensation. In this claim, a faulty refrigerator unit leaked water over a supermarket’s floor. The leak wasn’t marked with a caution sign, and the woman slipped over and severely injured her ankle, which required surgery. Her medical costs, loss of income, and need for continued medical treatment gave her the grounds to ask for a large sum of compensation. If uninsured or unsuitably covered, this case could have been a devastating blow to the business.

The average cost of public liability insurance

Public liability insurance premiums vary depending on the type, needs, nature, turnover, and size of your business, as well as the industry in which your business sits. Typically, the larger your business and the higher its risk for causing injury or property damage, the higher the cost of public liability insurance. A small business owner may pay a cheaper premium due to their reduced size and business demand, which may result in less risk.

Get covered

No matter your industry, you should make it your business to ensure you’re properly covered in the event of a public liability claim. To protect all you’ve worked for and to understand which public liability policy best suits your needs, as well as the other types of insurance you should consider, compare business insurance at no cost to you at Compare the Market.

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