Written by Public liability insurance is a type of business insurance that protects businesses and individuals in case they are found legally responsible for injury or property damage to third parties during their business operations. It plays a crucial role in safeguarding businesses from potential financial losses arising from legal claims or lawsuits filed by the public.
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How does public liability insurance protect my business?
Public liability insurance provides essential protection to businesses by covering various liabilities related to accidents or incidents on their premises. Here's how it can safeguard your business:
- coverage for bodily injury: If a third party sustains bodily injury due to your business activities, public liability insurance can cover their medical expenses, rehabilitation costs, and potential income loss resulting from the injury.
- coverage for property damage: If your business causes damage to someone else's property, such as a client's or a vendor's, public liability insurance can cover the costs of repair or replacement.
- legal defence and settlement: Public liability insurance offers coverage for legal expenses, including hiring lawyers and defending against legal claims. It can also cover settlement costs if the claim is resolved outside of court.
- reputation protection: In addition to financial coverage, public liability insurance helps protect your business's reputation. By demonstrating your commitment to responsibility and accountability, it enhances trust among customers, clients, and partners.
What does public liability insurance cover?
Public liability insurance typically covers a range of incidents and liabilities that may occur during your business activities. While policy coverage may vary, here are common areas of coverage:
- accidental injury: Public liability insurance covers legal liability if someone is injured due to your business activities or premises.
- property damage: It covers damage caused to third-party property due to your business operations.
- product liability: If your business supplies products that cause harm or injury to customers, public liability insurance can cover resulting legal liabilities.
- legal expenses: Public liability insurance helps cover legal defense costs, including attorney fees, court costs, and settlement or judgment fees.
- advertising liability: It may provide coverage for certain types of advertising-related claims, such as defamation or copyright infringement.
It's important to carefully review a policy you intend to buy to understand its specific coverage, exclusions, or limitations. You can easily compare multiple insurance policies right here through Savvy. Our free comparison service makes it easy for you to potentially find a policy that fits in with your business needs.
What is usually not covered by public liability insurance?
Typically, public liability insurance does not cover the following:
- injuries to yourself, your employees, or workers
- damage to your own property
- the cost of punitive damages if you were found to be professionally negligent
- the cost of fixing damage as a result of faulty workmanship
- product recalls preventing further harm
- events that happened before or after the beginning or end of the insured period
It's essential to carefully review your policy terms and conditions to understand the specific coverage limitations of your public liability insurance. By being aware of what is generally not covered, you can better assess your risk exposure and explore additional insurance options to address any potential gaps in protection.
Is public liability insurance mandatory in Australia?
Public liability insurance is generally not mandatory for all businesses in Australia. However, certain industries or professional associations may require it as a condition of operating or obtaining membership. For example, tradespeople, contractors, and event organizers often need public liability insurance to meet regulatory requirements or secure contracts. Additionally, some government bodies, venues, or clients may insist on proof of public liability coverage before engaging in business activities. Even if it's not mandatory, having public liability insurance is highly recommended as it offers financial protection against potential claims and liabilities arising from third-party property damage or personal injury.
How much public liability insurance do I need?
Determining the right coverage amount
When it comes to public liability insurance, the amount of coverage you'll need will depend on various factors unique to your business. Here are some key considerations to help you determine the appropriate coverage level:
1. Nature of your business: Assess the type of activities your business engages in and the potential risks involved. Higher-risk industries like construction or manufacturing may require more coverage.
2. Business size and revenue: Larger businesses or those with higher revenue streams may need more coverage to safeguard their financial interests.
3. Industry standards: Research what coverage limits are typical in your industry. This can give you an idea of what other businesses in your sector consider adequate.
4. Your client requirements: Some clients or contracts may specify a minimum coverage amount as a condition for doing business. Make sure you meet any contractual obligations.
5. The value of your assets: Evaluate the value of your business assets, such as property, equipment, and inventory. Consider how much coverage would be necessary to protect them in case of damage or loss.
6. Potential damages and legal costs: Estimate the potential costs associated with third-party claims, including medical expenses, legal fees, and settlements. It's essential to consider worst-case scenarios to ensure sufficient coverage.
If you're looking for the right public liability insurance coverage for your business, Savvy is here to help. Our free comparison service allows you to easily compare multiple insurance policies and find one that suits your specific needs. Start comparing policies now with Savvy to start your journey to find the best possible public liability insurance for your protection.
How do I compare different public liability insurance policies?
When selecting the right insurance policy for your business, it's important to compare the following variables:
Cost of premiums:
Carefully consider the price of different public liability insurance policies. While some policies may provide the same coverage, their prices can vary significantly. However, remember that the cheapest policy may not always be the best choice for your specific needs.
Policy coverage:
This is a crucial aspect to assess as a business owner. Ensure that the policy covers all the areas where your business faces the risk of causing harm or injury to third parties or their property. Whether it's a construction site with heavy machinery or a second-hand market stall, your insurance should protect you from potential legal actions arising from various scenarios.
Maximum benefit amount:
Determine the appropriate level of coverage required for your business. Contracts, government tenders, and professional bodies often specify the minimum amount of public liability insurance you need. For instance, federal government building contracts may require a minimum of $20 million, while state government contracts often specify $10 million. Some professional associations also have coverage requirements for membership. Keep in mind that benefit amounts typically range from $5 million to $20 million, but larger projects may require higher coverage, such as music festivals with public liability insurance in New South Wales reaching up to $100 million.
Optional extras:
Review the Product Disclosure Statement (PDS) carefully to identify any optional extras that may be beneficial for your policy. These can include additional product liability insurance or coverage for multiple business locations.
Compare these variables when selecting the right public liability insurance policy for your business. Our free comparison service allows you to easily assess multiple policies and find one that suits your specific requirements from our panel of leading insurers. Take advantage of our service and make an informed decision to protect your business today!
Types of business insurance
Frequently asked questions about public liability insurance
Public liability insurance offers your business cover in case anyone is injured, or their property is damaged, whilst on your business premises. Product liability covers you in case anyone or anything is damaged as a result of a product you distribute, supply or manufacture.
Yes – a general business insurance package will usually include public liability insurance, professional indemnity insurance and workers’ compensation insurance, as these are the most common forms of insurance and are often bundled together.
Absolutely, public liability insurance is available for tradespeople. It's crucial to have this coverage as it protects you against potential liability claims that may arise from your work or interactions with clients or the public.
Yes, public liability insurance can cover subcontractors. This coverage ensures that subcontractors are protected against potential liability claims that may arise from their work or actions while performing their duties.
Several factors can influence the cost of public liability insurance, including the nature of your business, the state you live in, the industry you operate in, your annual turnover, the number of employees you have, the coverage limits you choose, and any additional risks associated with your operations.
Although annual policies are more common, it’s possible to take out public liability insurance for specific events. Common examples include a public concert or music festival, parties, fireworks shows, public parades or community celebrations. Such one-off events are more often covered by smaller specialist insurers, rather than large general insurers.
Professional indemnity insurance covers an individual or small business against claims alleging professional mistakes, misconduct, bad advice and negligence. Public liability is more about someone or their property getting directly hurt or damaged.
Yes – the premiums for all your business insurance are claimable as the cost of carrying out business, so you can claim them as a business expense on your tax return.
Yes, public liability insurance can potentially cover defamation claims. If someone alleges that your actions or statements have caused harm to their reputation, this coverage can help protect your business by providing financial support in the event of a defamation claim.
This isn’t compulsory by law, but if you run any sort of business offering a trade or service to members of the public, you should have public liability insurance.
Yes, public liability insurance generally covers accidents that occur on your business premises. This ensures that you are financially protected in case someone suffers an injury or property damage while visiting your premises.
Yes, public liability insurance is available for construction projects. It is important to have this coverage to protect your business from potential liability claims arising from construction site activities or interactions with third parties.
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Savvy does not compare all business insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.
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