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Running a business can be tough work. It takes long hours and extensive planning to safeguard your business’ growth and success, and you don’t want to be left blindsided by the unexpected. For this reason, public liability insurance* is one of the most important considerations when starting up or maintaining a business.

What is public liability insurance?

Public Liability insurance is designed to protect you and your business in the event a customer, supplier or member of the public brings a claim against you due to their being injured or sustaining property damage as a result of your negligent business activities.

Business owners have a duty of care to any third party that comes into contact with their business and its activities Businesses open to the public can be especially vulnerable to third party accidents, which can result in costly public liability claims.

Having an adequate level of cover for your business can help you avoid potentially crippling litigation fees and continue your day-to-day operations.

What does public liability insurance typically cover?

Public liability insurance typically covers:

  • loss or damage to third party property.
  • injury to or death of a third party.
  • legal costs you are ordered to pay as a result of a covered claim.
  • legal costs incurred in defending a covered claim
  • others acting on your behalf (typically covers workers who may be acting on behalf of your business against claims made by third parties).

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

Conversely, a florist may face a smaller risk, and therefore only require a lower level of coverage. While it’s not a legal obligation for all businesses, it’s strongly recommended all businesses consider public liability insurance.

barista serving customer

What doesn’t public liability insurance typically cover?

Before taking out public liability insurance, it’s crucial to understand what isn’t included in your coverage. The policy wording/Product Disclosure Statement (PDS) will tell you what is excluded in your policy, however typical exclusions include:

  • your responsibility for your injured workers. This is covered through workers’ compensation insurance;
  • punitive damages. The extra damages awarded if a judge believes your behaviour was exceedingly reprehensible;
  • product recalls and withdrawals. Expenses that arise when your business’ products are recalled from the market;
  • asbestos. This includes incidents involving asbestos materials. This is typically covered under asbestos liability insurance; and
  • aircraft products. Usually covered under different levels of aviation insurance.

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

Why might I need public liability insurance?

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

Case Study: Slip and Fall

Let’s use an example of how public liability insurance can benefit your business.

A pipe in a store has leaked water all over the floor, and the employees have not put out a caution sign to warn customers of the hazard. An unsuspecting customer slips in the puddle and severely injures their wrist, which now requires expensive ongoing treatment.

The injured customer makes a claim against the store for compensation since the accident was the fault of the business for not taking reasonable care to avoid harm to their customers. The payout amounts to $100,000, far more than the store would be able to afford without their public liability insurance to help.

Frequently asked questions

How much is 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 company operates. Typically, the larger your business and the higher its risk for causing injury or damage, the higher the cost of public liability insurance.

For example, a small cafe owner may pay a cheaper premium due to their reduced size and business demand, which may result in less risk. On the other hand, someone running a large construction company will typically pay much more to insure their business against public liability claims because of their larger workforce and risk to the public.

To find out how much you could potentially pay for public liability insurance, you can compare your options and get a quote with us.

What’s the difference between public liability insurance and professional indemnity?

They may sound similar, but public liability insurance and professional indemnity are two very different products. Public liability insurance covers you when your business’ day-to-day activities cause injuries or damage to a third party, while professional indemnity covers claims for loss or damage that occur due to bad advice or mistakes in your service.

Let’s use an example. Jenny is a real estate agent who’s expecting a potential client for a meeting. The client arrives at Jenny’s office but trips over the uneven floorboard that Jenny had meant to fix for ages. The client suffers an injury and sues Jenny’s practice. Her public liability insurance steps in to handle the claim and its costs.

In another example, Colin is an accountant who gave bad financial advice to a client who then suffers monetary damages. The client sues Colin to recoup their losses, and Colin enlists his professional indemnity insurance to cover his legal costs.

Is public liability insurance compulsory in Australia?

There is no overarching statutory requirement in Australia for a business to have public liability insurance. However, there are a few industries and professions that do mandate having public liability insurance, and the requirements can change between the states and territories.

Public liability insurance in

NSW

VIC

QLD

WA

SA

TAS

ACT

NT

Not mandated by state law.¹Not mandated by state law.²Not mandated by state law but may be required in certain industries.³Not mandated by state law.⁴Compulsory for certain types of businesses.⁵Compulsory for certain types of businesses.⁶Not mandated by state law.⁷Not mandated by state law.⁸

Even if your industry doesn’t require public liability insurance, though, it can still be still a vital part of protecting your business against potentially damaging third party claims.

If your small business was hit with a $100,000 claim from a member of the public for an injury they sustained at your premises, how would you cope with the legal cost and the payout without some form of insurance?

Can I get public liability insurance if I’m self-employed?

Yes, you can! Anyone in business can get public liability insurance. Public liability insurance can help your business handle the cost of third-party claims for injuries or property damage, and those who are self-employed probably face enough costs already without those added on!

Sole traders can also get public liability insurance, and you can find out more in our guide to business insurance for sole traders.

Cover your business today

No matter what industry you work in, you can easily make it your business to get covered in the event of a public liability claim. To protect all you’ve worked for, compare business insurance and get a free quote through us.

*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.

Sources

1. NSW Government: Service NSW – Get liability insurance for your business. Accessed April 2020.
2. Victoria State Government: Business Victoria – Find the right insurance. Last updated October 2019. Accessed April 2020.
3. Queensland Government: Business Queensland – Insurance. Last updated July 2018. Accessed April 2020.
4. Government of Western Australia: Small Business Development Corporation – Insurance. Accessed April 2020.
5. Government of South Australia – Insuring your business. Last updated December 2016. Accessed April 2020.
6. Tasmanian Government: Business Tasmania – Fact sheet – Business insurance. Accessed April 2020.
7. Australian Government – Business insurance: Insurance in your state or territory. Accessed April 2020.
8. Australian Business Licence and Information Service: Northern Territory – Territory Business Information Kit: Information Pack. Accessed April 2020.

Stephen Zeller, General Manager

Meet our Business Insurance expert, Stephen Zeller

As our General Manager of Business Insurance, Stephen Zeller says public liability insurance is designed to protect you and your business if a supplier, customer or member of the public makes a claim against you. Stephen believes in educating customers about the benefits of public liability insurance so that they can reduce the risk of financial loss.

With over 30 years’ experience in the financial services industry, including 27 years at the Bank of Queensland, Stephen is Compare the Market’s leading expert in business insurance. He’s also a long-time customer rights advocate and an allied member of the Australian and New Zealand Institute of Insurance and Finance (ANZIIF).

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