Public Liability Insurance in Australia

Whether you're in the construction business or run a small motel, the risk of injuring someone or damaging their property shouldn't be ignored. In 2018-19*, there were over 37,000 liability claims reported in Australia over the course of a single year.

Luckily, public liability insurance can protect you. It can cover compensation costs, legal fees, medical costs and more, protecting you and your business from serious financial repercussions.

*General Insurance in Australia report, April 2020

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If you are ready to speak with a consultant about different business insurance options available, simply enter your details in the form. Keep reading if you want to learn more about the different types of cover available.

What is public liability insurance?

What does public liability insurance cover?

Public liability insurance will generally cover you for the following:

Note: Professional indemnity insurance is offered by insurers in conjunction with public liability insurance.

Who needs public liability insurance?

After workers compensation, public liability insurance is one of the foundational forms of cover that very few occupations can afford to go without. It's not mandatory in most cases, but lawsuits of this sort can affect almost any type of business and leave you owing large sums of money.

Almost all businesses would benefit from public liability cover. Regardless of business size, public liability insurance is suitable if the business has a physical premise or operates in public (such as a mobile business). Here are some obvious examples:

• Retail. Grocery stores, book shops and department stores have physical locations with lots of foot traffic, increasing the chances of someone getting injured.
• Health and beauty. Gyms, physical therapy centres and hair salons also bring the public into their premises. Even solo professionals may need public liability if they carry equipment that could damage or injure a member of the public.
• Hospitality. Restaurants, bars, clubs and cafes bring in lots of people while also creating a fast-paced environment where injuries are more likely.
• The trades. Any business or independent contractor operating on a work site would benefit from public liability insurance, and in some cases are required by law or by contract to have it.
• Entertainment. e.g. dancers, performers, event organisers, etc.
• Real estate e.g. Landlords, strata management etc.

It's important to remember that public liability will protect business in these industries if they cause injuries or damage that are not related to the professional service provided.

Look no further than the claims data

A snapshot of Australia. In 20171 there were over 30,000 claims reported for accidents that occurred in 2017 and 36,000 reported for accidents that occurred in 2016. If we go back four years to 2013, we can get a snapshot of liability incidents by state and type.

Australian Prudential Regulation Authority, 2014. Note: incidents takes into account claims reported and an estimate for claims unreported.

• See the details

  State / Territory	All incidents	Injury incidents	Property damages	General losses
  Total (Australia)	31,899	9,302	20,770	1,827
  New South Wales	9,667	3,279	5,759	629
  Victoria	6,583	1,489	4,738	356
  Queensland	8,431	3,013	4,969	449
  South Australia	2165	426	1,646	93
  Western Australia	3707	718	2,823	166
  Tasmania	767	236	496	35
  Northern Territory	106	15	84	7
  Australian Capital Territory	424	169	228	27

• Still not convinced?

  There are some key questions if you are still not sure:

  • 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 lose staff if you were no longer able to cover their wages?

How do I compare public liability insurance policies?

There's a lot more to business insurance than just public liability. You can speak to a broker or get quotes from different insurers to find what cover you need, at a price that makes sense for you.

Here are a few questions to ask yourself as you mull your options:

Does the insurer offer other products you need for your business? There are dozens of cover types a business might need beyond just public liability, and those business are better off going with someone who offers the whole package. It's more efficient, you might receive a discount and you can be comfortable knowing you're with an insurer who has a holistic view of your business risks.

What will your out-of-pocket costs be? Whenever your claim is approved, you'll almost always have to pay a small portion of the payout yourself and the insurer will cover the rest up to the insured amount. This is your excess. All else being equal, the policy with the higher excess will be the worse deal.

What will your payout be? If you need to make a claim, your insurer will have a limit on what they will pay out. The higher the benefit limit, the better for you. So make sure you take this into consideration when comparing policies

What's included? Not every policy will cover every instance of liability. For example, one policy may only cover you if the damage occurred on your property. Others will extend this to include damage you cause elsewhere, such as on house calls. Don't buy a cheaper policy over a more expensive one until you are sure it includes the cover you need.

Is anything excluded? Every policy has a list of reasons they won't pay your claim. For example, most won't pay for damage related to asbestos, and most won't pay your claim if you've done something illegal that caused the damage or injury. When comparing policies, make sure you can live with your chosen policy's exclusions.

How much does public liability insurance cost?

The average small business owner can expect to pay about $80.75 per month in public liability insurance. But you can expect costs to go up to over $600 if your business is considered high-risk. Finder took a look at two industries - food and construction - with a different number of employees to get a gauge on how much it costs to get cover. Here were the results:

Quotes were taken from BizCover's Insurance engine in March 2018. All policies have an excess of $500.

What affects the cost of public liability insurance?

Here's what an insurer will generally take into consideration when coming up with your premium:

• What your business does. Some businesses simply attract more risk than others. For example, the risk of injury or damage on a construction site will be higher than that of a retail store. Insurers will analyse what you do, compare this to past claims in that industry and factor this into your premium.
• How big your business is. The larger the business, the higher the risk of injury or damage. For example, a sole trader (which makes up some 1.3 million businesses in Australia) or a company with just one employee could expect to keep its costs to a minimum, well below $100 per month. But when a small business enters the "10 to 19" employees category, the cost of the monthly premiums could skyrocket to an average of over $1,5001.
• Your business location. You can expect a higher premium if your business is in a high-risk location, such as an airport, construction site, railway station or mine site.
• The structure of your policy. You can affect the price of your policy by choosing a higher or lower excess or higher or lower benefit limits.

1.Bizcover.com.au

What's not covered by a public liability insurance policy?

There are two very important features that public liability insurance does not cover you for. These are:

• Negligence in your service. This is covered by professional indemnity insurance (e.g. cover if you incorrectly install a kitchen sink)
• Injuries to your employees. This is covered by workers compensation (e.g cover for injuries, illnesses in the workplace)

General exclusions

Every policy also has a list of general exclusions. These may differs between insurers, but 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's 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's 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's for certain types of advertising liability, for example a mistake in the advertised price of a product or service
• It's for any liability or obligation that you assume under contract or agreement
• It's caused by a deliberate act or omission by you or any employee
• It's caused by electromagnetic fields or electromagnetic interference
• It results from your Internet operations
• It's for damage to computer data or programs caused by the use of any computer hardware of software
• It's 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's caused by any breach of professional duty by you
• It results from an act of war or terrorism

To find out exactly what is not covered, read the general exclusions of the product disclosure statement (PDS).

Take me to my options

FAQs

• Is public liability insurance tax deductible?

  Public liability insurance premiums are considered a business expense and are therefore tax deductible. Each year you'll get a tax invoice from either your insurer or your broker, depending on who sold you the policy.

  Find out more in our guide on the cost of public liability insurance

• What level of public liability coverage should I buy?

  The indemnity limit has to be chosen on the level of risk your business is taking every day. For some industries, there are minimum levels, normally around $5,000,000. Generally, when you decide to buy public liability insurance, you decide the amount to insure, the so-called limit of indemnity, depending on the possible damage you could cause. This limit is usually set over $500,000 or $1,000,000. Public liability insurance coverage depends on the damage request of a third party. If the court or the judge states that you are accountable for financial compensation, this policy can cover all the claims up to the limit of indemnity.

• Is public liability insurance mandatory?

  It depends on the state. You should check with your state insurance commission whether your business should have mandatory public liability insurance. However, employers' liability insurance is required by many states.

• What is Broadform Public Liability Insurance?

  Broadform Public Liability Insurance is the term given to policies that provide cover for both Public Liability and Product Liability. Not all policies will automatically cover both product and public liability so it is crucial to check the policy terms when signing up for cover.

• Does Public Liability Insurance cover accidental damage?

  Yes. Public Liability Insurance will generally provide cover for accidental damage to property that is owned or controlled by a third party.

• Can I get Public Liability Insurance for a one off event?

  Yes. There are a number of specialist insurers that offer Public Liability Insurance for one off events. Most larger insurance brands will not provide cover for single days/events but can extend cover to include additional cover that may be required for these events.

• Can contact workers take out Public Liability cover?

  When you're a contract worker, public liability insurance offers many potential benefits. As a contractor, you run your own business and can be held legally responsible for your own actions, so you need to have an adequate level of financial protection in place if any claims are brought against you. Similarly, if you're a subcontractor, you probably won't be covered by the main contractor's insurance policy, so public liability cover is an important consideration. Without public liability insurance in place, the financial consequences of a claim made against you could be disastrous. The good news is that it's quite easy for contract workers to take out cover. Shop around for an insurer that allows you to tailor a policy to suit the specific cover needs of your business, and take advantage of the financial protection and peace of mind that this type of cover offers.