Public Liability Insurance: What’s Covered & Is it Suitable For Your Business?

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Public liability insurance is something that can be difficult for new business owners to grasp, particularly knowing what’s included, what’s excluded, how much coverage you need, and whether it protects your property.

At iSelect, we want to help you understand public liability insurance. To assist you, we’ve put together this short article discussing what public liability insurance is, what it covers and what your statutory requirements are. Read on to find out more.

Prior to making a decision on a level of cover, ensure you review the Product Disclosure Statement for details of policy inclusions, limitations and exclusions.

What is public liability insurance?

Part of doing business is interacting with your customers, suppliers and the public, whether they’re visiting your place of business or using your products or services. Small business owners have a responsibility to take reasonable steps to ensure the safety of their customers, suppliers, and the community, as well as for their property.

Public Liability insurance is designed to provide protection* for you and your business in the event that a customer, supplier, or a member of the public are injured or sustain property damage as a result of your negligent business activities.

Negligent action – or simply ‘negligence‘ – refers to the causing of reasonably foreseeable harm due to breach of a duty of care owed to the individual in question, such as making someone sick by feeding them tainted food, or damaging their property through improperly conducting your job¹.

What does public liability insurance cover?

In the event that your business was found negligent, public liability insurance will assist you to pay the compensation awarded to the impacted party, instead of it coming from your business or – in the case of sole traders with unlimited liability – your own personal finances. Additionally, it can help cover associated legal costs.

Coverage limits for Public liability insurance are often offered in $5 million increments, with the premium usually increasing as the policy limit increases.

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Who needs public liability insurance?

While (unlike CTP insurance) there is not a statutory obligation that every business hold public liability insurance. However, some industries may have licensing requirements to hold a minimum level of public liability insurance and certain associations and contracts could specify public liability insurance as compulsory.

Broadly speaking, businesses that deal extensively with members of the public or operate in public areas such as parks or sports fields are more likely to be required to take out public liability insurance.

If your business requires people to physically attend your premises, it’s possible you may need to hold public liability insurance.

A range of businesses are typically required by federal, state or local government to hold public liability insurance in order to operate – from tradespeople to educational institutions, food and beverage vendors, and more:

Schools
Registered Training Organisations (RTOs)
Event organisers
Businesses and events licensed to serve alcohol

Additionally, rules can differ between jurisdictions, with some states and territories requiring public liability insurance as a condition of operation for businesses who – were they to operate in another state or territory – may not be subject to such a requirement.

Want to learn more about public liability insurance in your state? Please see our guides to public liability insurance in the following states:

Public Liability insurance vs. Professional Indemnity insurance: What’s the difference?

As well as understanding what public liability covers, it’s important to note what it typically doesn’t cover. Part of this is understanding the difference between public liability and other common business insurance products, such as professional indemnity insurance.

Professional indemnity insurance:

Professional indemnity insurance is for businesses or professionals who provide professional services to clients – think accountants, financial advisors, management consultants, lawyers, health professionals and so on.

It ensures that your business can be covered against claims for damages due to acts and omissions committed in your provision of a specialist service or professional advice*.

Public liability insurance:

Public liability insurance does not cover a breach of professional duty. As such, some businesses may be required to hold both public liability insurance and professional indemnity insurance – such as an allied health professional who needs to protect against a client’s claim for injury during treatment, as well as allegations of negligence resulting from that same client slipping on the clinic floor.

In short, public liability insurance provides you with coverage, up to any policy limits, for personal injury or property damage to a customer or member of the public due to your business activities*. Depending on the level of cover it could also cover legal and defence costs that may result from the ensuing claim. It doesn’t cover you for claims of professional negligence, as professional indemnity could.

As with most types of insurance, there will also be particular terms, conditions and exclusions to the policy, set out in the applicable policy wording.

Compare public liability insurance with iSelect in partnership with BizCover

Need help finding a public liability insurance policy for your business? iSelect has partnered with BizCover to help you compare business insurance policies from a range of insurers. Start comparing online today, or call the friendly team on 13 19 20.

*Please note that all insurance is subject to the terms and conditions set out in the policy wording or Product Disclosure Statement. The information set out above is general only and should not be relied upon as advice.

iSelect’s partnered with BizCover Pty Ltd (ABN 68 127 707 975: AFSL No.501769) to help you compare small business insurance policies. iSelect earns a commission from Bizcover for every product sold through the website or contact centre. iSelect and BizCover do not compare all brands in the market, or all products offered by all brands. iSelect does not arrange products from the brands we compare for you directly, but iSelect will refer you to our trusted partner, Bizcover Pty Ltd who can.

Any advice provided in this article or on iSelect’s website is of a general nature and does not take into account your objectives, financial situation or needs. You need to consider the appropriateness of any information or general advice iSelect gives you, having regard to your personal situation, before acting on iSelect’s advice or purchasing any product. You need to consider if the insurance product is suitable for you. Please read the Financial Services Guide before buying any insurance policy.

Sources:
1. https://www.business.gov.au/risk-management/insurance/liability-insurance-and-professional-indemnity