Does your business work with customers in person? If so, you'll need public liability insurance.
Public liability insurance offers financial protection for you and your business if you are found legally responsible for personal injury to a third party or damage to their property. You're covered for any costly legal fees as well as damages or injuries that you have caused. A public liability insurance policy can extend cover to members of your business including staff, employees, directors and partners.
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What's in this guide?
This guide looks at the ins and outs of public liability insurance, specifically at what is and isn't covered and how it is different to other forms of cover. If you are ready to receive quotes for cover, simply enter your details in the form below and an adviser will be in touch to help you compare different options.
What is public liability insurance
Is this the right cover for me?
What is and isn't covered by public liability insurance ?
Public liability won't cover every type of liability. Policies will generally include cover for:
- Legal liability. Public liability insurance provides cover when a court finds that you are legally responsible to pay damages and additional costs for:
- Damage to someone else’s property
- Personal injury to someone else
- Advertising liability
- Legal costs. If a legal liability claim is made against you, your public liability policy will cover the costs incurred in your legal defence.
- Choose your level of cover. Many insurers will offer you a choice of the maximum level of cover, for example $5 million, $10 million or $20 million.
- Property in your care. You may be able to take out additional cover for damage to property in your care, custody or control. Covered items include personal belongings, temporarily occupied or leased premises and vehicles in a car park.
- Cover for other people. Public liability will not only include you but any director, business partner, executive officer, shareholder or employee.
- Cover for other activities. Many policies will allow you to extend cover beyond your normal business activities to include the provision of sports and child care facilities, first aid and ambulance services, and the provision of food and beverages to employees and visitors.
- Products liability. Some policies will also include products liability cover for injury or damage caused by your products.
- Loss of goods in possession or legal control: Provides cover for loss of, loss of use of goods that are not owned by the insured but are in their possession and legal control, as though it were Damage to the Property
- Damage to goods in possession or legal control: Provides cover for physical damage to goods that are not owned by the insured but are in their possession or legal control.
- First aid expenses: Provides cover for expenses incurred by the insured for first aid given to other parties at the time of an injury.
- It relates to asbestos
- It relates to your responsibility to injured workers (workers compensation)
- It relates to punitive damages
- It is caused by the operation, possession or use of an aircraft or watercraft
- It arises due to defective work done or undertaken by you
- It relates to products liability
- It is for damage to property you own or that is in your care, except for certain items such as vehicles and business premises
- It arises due to the use of a vehicle
- It relates to the cost of recalling, withdrawing, replacing or repairing products, or making a refund on the price paid for products
- It is for certain types of advertising liability, for example a mistake in the advertised price of a product or service
- It is for any liability or obligation that you assume under contract or agreement
- It is caused by a deliberate act or omission by you or any employee
- It results due to electromagnetic fields or electromagnetic interference
- It results from your internet operations
- It is for damage to computer data or programs caused by the use of any computer hardware of software
- It is caused by a claim of defamation brought against you
- It arises from the communication, display, distribution or publication of electronic data
- It arises from the total or partial destruction, erasure or corruption of electronic data
- It is caused by any breach of professional duty by you
- It results due to an act of war or terrorism
How is public liability different to product liability insurance?
Product liability is generally available as additional cover option to public liability and provides cover for claims arising from injury or damage caused by the use of a product provided by your business.
How is a product defined?
A product is a tangible good that was either sold, supplied, maintained or modified by your business. Claims can be made if the product has a safety defect and it's safety is different to what the community generally expect the product to do.
|Professional Indemnity Insurance||Public Liability Insurance|
Can I combine these under one policy?
Professional indemnity insurance covers the professional and his or her actions but does not provide cover for an accident that may take place on the professional’s premises when a customer is present. The professional will have to purchase public liability insurance cover as part of his or her full insurance package.
Public liability insurance will only cover the insured parties that have been listed in the policy. This is usually defined as:
- The business that has been nominated for the work
- The company directors of the business
- The business employees
- Partners of the business
- Contract workers will generally be required to take out their own form of protection in order to be eligible to work on the building site.
A good way to determine if you need cover is to ask a few simple questions:
1. Do you interact with the public?
Public liability insurance covers business for all possible claims that may occur due to injury or damage to a third party’s property on the business’s premises or for work in public spaces. If your service or product interacts with the public at all then you'll need to consider getting cover e.g:
- Businesses which use a premise. Supermarkets, manicurists, tattooists, doctors and dentists are just a few businesses that invite the public onto their property as the main part of their business operations.
- Businesses who serve the public. Road workers, handyman, personal trainers, window cleaners, market stall owners, etc.
2. Are you willing to cover these costs?
If a public liability claim was to arise then you'll need to cover both 1) Any compensation to the person who makes a claim against you as well as 2) The cost of your legals expenses e.g. hiring a defence layer, court fees. Public liability insurance is designed to help you cover these expenses e.g. if an accident happens at your restaurant.
Industries that may need public liability cover
- Entertainment e.g. Dancers, Performers, Event organisers, etc.
- Health professionals e.g. Nutritionists, Occupational Therapists, Yoga Instructors etc.
- Hospitality. Restaurants, Bars, Clubs, Cafes.
- Real estate e.g. Landlords, Strata management.
- Other. Building / landscape designers, Vets, Public Relations, Outdoor Internships
Certain types of businesses and states will need public liability insurance cover with certain specifications e.g. electricians and plumbers need public liability insurance in NSW.
States or territories where public liability insurance is required
It's usually a requirement for business owners to secure a license.
Electricians require PL insurance with an option known as 'consumer protection'. A minimum of $5 million in PL is required with at least $50,000.
Plumbers are required to acquire liability coverage before getting a license. Plumbing contractors need a minimum of $5 million in public liability insurance.
PL insurance is required for film makers before they are given permission to shoot films in the ACT. A minimum of $10 million in cover is required.
Most businesses require PL insurance before being able to provide services.
Regardless of business size, public liability insurance is suitable if the business has a physical premise. Small businesses that fall into this category include:
- Clothing shops
- Retail shops
- A gym
Comparing and selecting cover
How much does public liability insurance cost?
As with most insurance packages, how much public liability insurance will cost will depend on any potential risks associated with outsiders who use the premises. The cost of cover can range from a few hundred dollars to tens of thousands of dollars per year depending on the nature of the business. Factors considered by insurers when determining public liability insurance premiums:
- Nature of the business provided: This will involve looking at the type of activities the business undertakes. An insurer will review past claims data and go to great lengths researching different occupations and business types. For example, the risk of liability arising for personal injury or property damage may be higher on a construction site than in a retail store. Nature of the business provided will have the largest impact on the cost of the public liability insurance.
- Size of the business: A larger business with more employees is likely to face an increased number of risks to smaller businesses. Insurers will consider the annual turnover of the business and average number of staff.
- Location of business activities: Businesses that regularly carry out business in environments that have an increased likelihood of a claim arising can expect to pay higher for cover. Such high-risk environments may include airports, construction sites, railway stations and mine sites.
Is Public Liability Insurance Tax Deductible?One important consideration when choosing the right business insurance policy is whether or not your premiums will be tax deductible. As a general rule, you can claim your business insurance premiums as a tax deduction if they are directly related to your ability to earn an assessable income. With this in mind, public liability insurance premiums are 100 per cent tax deductible. If you purchased your policy direct from an insurer, the insurer will provide you with a tax invoice each year that you can keep for your records. This invoice will come via your insurance broker if you purchased through a broker.
How do I compare public liability insurance policies?
When comparing different brands there are a few considerations to make in order to get the right policy for your business situation.
Some final questions you might have
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