Does your business work with people in public spaces? 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. This ensures 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 to provide cover for other members of your business including staff, employees, directors and other partners carrying out activities for the business.
How can this guide help?
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.
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What's in this guide?
This guide will explore the ins and outs of public liability insurance, looking specifically at what is and isn't covered and how it is different to other forms of cover.
How does public liability work?
Do you need cover?
What is and isn't covered by public liability insurance ?
While cover between companies may vary, 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.
Although the list of general exclusions on a public liability insurance policy differs between insurers, your claim will typically not be paid if:
- 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.
How is public liability insurance different to professional indemnity insurance?
|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 has the benefit of covering a business for all possible claims that may occur due to injury or damage to a third party’s property on the business’s premises. It is a crucial consideration to those businesses that involve direct contact with members of the public whether it is through the provision of a service or the selling of a tangible product. 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.
Legal costs when fighting a case are often covered by public liability insurance too as negligence has to be proven beyond doubt before a compensation claim is awarded so often the business requires a defence lawyer to ensure that the business gets a fair hearing.
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
When deciding if your business could cope without public liability insurance, there are some key questions to ask when considering the immediate and consequential losses that may occur as a result.
- In the event of a claim, would I be able to cover the legal expenses that may be occurred? Court and lawyer fees can add up extremely quickly.
- How might your business suffer if you were forced to take time out of work frequently to attend court hearings? Would you be required to hire alternate staff to step in for you while you were absent?
- In the event that you were found liable for damages, would you be able to rely on capital that your business had saved to cover losses?
- In the event that you were required to close your business temporarily, would you be able to handle potential losses sustained from clients taking their business elsewhere?
- Could you afford to loose staff if you were no longer able to cover their wages?
As a general rule, public liability insurance is not compulsory for businesses in Australia. However, certain types of businesses have their own unique requirements when it comes to public liability cover. In many Australian states, trades that operate under a license issued by the state government, for example electricians and plumbers, have mandatory public liability insurance requirements that must be met. Other businesses may also need to consider public liability requirements imposed by industry bodies.
In addition, a business’ landlord may require them to have a certain level of public liability insurance cover in place in order to be allowed to operate their business out of certain premises. On a similar note, if you’re a tradie employed as a subcontractor, you may need insurance cover in order to access certain work sites. However, such requirements are usually contained in individual contracts rather than being required under a particular law.
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.
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.