What is public liability insurance? (an in-depth look at public liability insurance)

What is public liability insurance? This cover is designed to pay claims brought forward by the general public concerning incidents connected to the policyholder’s business which cause:

  • Loss or damage to property
  • Personal injury and/or Death

Policy features will differ from one insurer to another. However, most providers will issue compensation for incidents that happen within your business and those that occur at events hosted by your company.  It is important to check if your policy provides Australia wide cover or is limited to a particular location or site.

Who needs public liability insurance?

A public liability cover is important for all businesses who may have clients or customers visit. Organizations that offer events or off-site activities which are open to the members of the public should also ensure they have public liability insurance.
Today, technology has made it easier for people to work at home. If you run a business from your home where customers visit, then you need to obtain this cover as it will not be included under your home insurance (which includes “domestic liability” only). The persons covered under this policy include:

  • Clients / Customers
  • Suppliers
  • Persons visiting your business premises including tradespeople
  • Public members attending your events or activities organized by your business
  • People taking part in activities or events hosted by your company.

This insurance is not a replacement for Work Cover / Workers Compensation which protectsstaff or people you have hired on work placements and sub-contractors. If you hold Work Cover, your public liability policy may also respond to protect you for additional common law liability beyond Work Cover expenses claimed by Sub-contractors if this has been declared to the insurer upfront.
Often, public liability is confused with professional indemnity insurance. It is best to understand the differences so that you obtain the right cover for your business.

Public liability and professional indemnity insurance explained:

Public liability insurance is ideal for businesses which interact directly with customers and those that work with physical products. In addition to a public liability cover, businesses that sell or manufacture food products should also obtain products liability insurance. This covers for damages to their customers due to dangerous or defective products.
Professional indemnity insurance on the other hand is designed to protect you against law suits for situations other than where you have necessarily caused personal injury or property damage – e.g. you may have just caused someone a financial loss. Examples of this include project managers failing to arrange suitable contractors and delaying a project which costs the principal additional expenses. In this scenario, no one has been hurt and nothing has been damaged – but a loss has been incurred due to the failure of professional services.
Professional indemnity insurance is crucial for professionals such as lawyers, accountants, consultants, market companies, digital agencies, architects, business analysts and software developers. However, tradesmen are also increasingly considering this cover to help protect against advice they may provide – e.g. thermal imaging reports by electricians or design recommendations by a carpenter.

Public Liability Comparison

Public liability quotes and features differ from one provider to another. When comparing quotes, you need to look at more than just the premium as the conditions and extent of cover can vary greatly. You also need to access your excess carefully – especially if you use sub-contractors as they may incur very significant additional excesses.
Depending on your occupation or business, certain policies will often have restrictions or requirements for cover – e.g. if you are in earthmoving, it is standard to expect the policy to include a “dial before you dig” type endorsement. Some policies include very onerous requirements and you should compare these to make sure you are protecting your business adequately and able to comply with these conditions – otherwise your cover is useless.