What is Business Liability Insurance? A Complete Guide for Australian SMEs in 2026

Running a small or medium-sized business in Australia comes with exciting opportunities as well as certain risks. From customers slipping on your premises to accidental errors in professional advice, unexpected events can happen at any time.

Business liability insurance is designed to protect you from certain third-party claims – such as for personal injury, property damage, or financial loss – where your business is legally liable (subject always to the specific policy terms, conditions, limits and exclusions), giving you the peace of mind to focus on growing your business. This guide will walk you through the main types of business liability insurance and who might need them.

What is business liability insurance in Australia?

Business liability insurance is any type of cover designed to protect your business from claims, such as third-party injury or property damage, or financial loss to others.

Why is business liability insurance important?

Regardless of type of services, every business faces risks. Mistakes can happen and accidents can occur. And customers or clients can take legal action, even if you are not at fault.

Business liability insurance can help with the following:

• Legal fees and costs: Liability insurance can help cover legal fees, settlements, and defence costs.
• Protects your finances and assets: Liability cover helps safeguard your business savings, equipment and assets from the cost of unexpected claims.
• Peace of mind: Knowing you’re protected allows you to focus on running and growing your business rather than worrying about worst-case scenarios.
• Meets legal and contractual requirements: Some industries, landlords, and clients require liability insurance before you can start work or sign a contract. Having cover helps you stay compliant.

Types of business liability insurance

Not all businesses face the same risks, which is why there are different types of liability insurance to suit different businesses and their needs. The below are some common examples of different types of business liability insurance you may wish to consider.

Public Liability insurance

Public Liability insurance is sometimes also referred to as “slips, trips and falls cover”. It’s designed to cover you if a third party (such as a customer, supplier or member of the general public) claims that your negligent business activities caused them injury or property damage.

Who needs Public Liability insurance?

Generally speaking, for many professions Public Liability insurance is not a mandatory, legal requirement – but considering Public Liability insurance for your business may still be a good idea.

In some cases, it’s a legal requirement to have a public liability policy in Australia. For example, to operate a market stall in a public space, or to rent business premises.

Many businesses may benefit from Public Liability insurance, including those that:

• Interact with customers face to face
• Rent business premises
• Run events or functions
• Work at client sites
• Tradespeople, where part of their licensing requirements involves holding Public Liability insurance
• And many other types of businesses.

Professional Indemnity insurance

Professional Indemnity insurance is there to help protect you from losses claimed by a third party due to alleged or actual negligence in your professional services or advice. This could involve something as simple as an admin error on a piece of documentation that leads to serious financial losses for the client.

Who may need Professional Indemnity insurance?

You may wish to consider this kind of cover if you provide any kind of professional services or advice to clients. In Australia, Professional Indemnity insurance is a legal requirement for certain professions in some states and territories, including, but not limited to:

• Real estate agents in NSW
• Registered building practitioners in NSW (as of 1 July 2026)
• Lawyers in Victoria
• Lawyers in NSW.

If you’re unsure whether or not your profession requires Professional Indemnity, then you should consider speaking with a legal expert.

Product Liability insurance

Product Liability provides protection in relation to claims by third parties due to personal injury or property damage caused by products sold or supplied by your business. Product Liability insurance is usually included as part of Public Liability coverage.

Who may need Product Liability insurance?

If your business sells or supplies products (whether physical items or even certain types of software), then you might  consider Product Liability cover. This includes roles like manufacturers, importers and wholesalers, retailers and online sellers, and food producers.

Management Liability insurance

It protects directors and officers and the insured company itself from the many types of exposures relating to the management of a company. This can include breaches of duty, misrepresentation, or decisions that negatively impact employees, customers, or shareholders.

Who may need Management Liability insurance?

Any company that has a hierarchal management structure or a board of directors could consider Management Liability insurance.

Owners and those responsible for the management of a company have a lot of specific responsibilities to manage. The scope of these responsibilities means that sometimes, errors can result in personal liability for alleged or actual wrongdoing. This is where Management Liability insurance may be able to help.

Employment Practices Liability insurance

Employment Practices Liability insurance is there to protect businesses from employment related claims, such as wrongful dismissal, bullying, harassment or discrimination. It is available as part of a Business Insurance Pack.

Who may need Employment Practices Liability insurance?

Employment Practices Liability helps to provide organisations with protection against claims. It is useful for those in offices or workplaces where employee disputes may arise or businesses in high-risk industries.

General Liability insurance

General Liability is similar to Public Liability insurance, in that it covers claims from third parties arising from property damage or bodily injury caused by your business operations. BizCover does not offer General Liability insurance, but according to other insurers’ descriptions, most General Liability policies also include personal injury. It is typically offered as a ‘catch all’ for liabilities not specifically covered under other policies.

Who may need General Liability insurance?

Similar to Public Liability, General Liability insurance may be something to consider if your business has a lot of foot traffic, rent business premises, run events, or work at client sites.

Workers’ Compensation insurance

Workers’ Compensation insurance provides coverage for employees who suffer a work-related injury or illness. It typically covers medical expenses, rehabilitation and a portion of lost wages..

Who needs Workers’ Compensation insurance?

In Australia, Workers’ Compensation is mandatory for all businesses with employees, with rules varying slightly by state and territory.

How much does business liability insurance cost?

First things first – there are many different factors that contribute to the cost of insurance policies. This includes the location and size of the business, as well as industry and claims history. As each small business is totally unique, you may find your own premium costs differe to the below examples.

Average cost of Professional Indemnity insurance for BizCover customers	Average cost of Public Liability insurance for BizCover customers
$97 per month	$39 per month

Business liability insurance case studies

To give you a better idea of why you may wish to consider business liability insurance and how it may come in handy, here are a few real-life insurance claim examples from the BizCover archives.

Public Liability insurance claims example

A concreter was working on a job site and put up a security fence to secure the work area. However, the concreter did not properly secure the fencing, and high winds blew the fence over. This resulted in damage to a third party’s vehicle.

After the incident, the concreter received a letter of demand outlining the damages caused to the third party’s vehicle. The third party requested a monetary compensation of $6,045.00 for the repairs to their vehicle.

Luckily, the concreter had Public Liability insurance. After assessing the supporting documentation, the concreter’s insurance company agreed to indemnify the owner of the vehicle and incurred a cost of $6,045.00.

Professional Indemnity insurance claims example

An interior designer was contracted to assist a client in designing, planning and strategizing a renovation for their property – specifically, the client wanted to renovate various ‘wet’ areas in the house. The client selected the tiles they wanted and provided the necessary specifications to the interior designer.

However, the insured accidentally wrote the wrong tile specifications on the selection page for the blueprint.

It wasn’t until a walkthrough was conducted and the client informed the interior designer that the wrong tiles had been installed in five different wet areas of the house. The incorrect tiles had to be removed and replaced with the correct tiles.

Fortunately, the interior designer had Professional Indemnity insurance. The insurance provider agreed with the supporting evidence, and incurred a cost of  $25,000 for the tile removal and replacement and relay of the tiles.

Business liability insurance for SMEs

Every business faces unique risks, and the right insurance can make all the difference when the unexpected happens. Whether you’re a tradesperson, a professional service provider or a retailer, understanding your liability exposure is the first step toward ensuring your business’s longevity.

While some types of business liability insurance may be mandatory – depending on your profession, industry and number of employees – most types of insurance are not. However, it may still be a good idea to consider business liability to help protect your business from unexpected claims.

BizCover has been helping make insurance easy for small business owners since 2008. We can help simplify the process of finding the right business insurance to suit your needs so you can focus on what matters most: running and growing your business with confidence.

This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording or Product Disclosure Statement (available on our website). Please consider whether the advice is suitable for you before proceeding with any purchase. Target Market Determination document is also available (as applicable).
The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. BizCover is not authorised to provide claims handling and settling services. This means we cannot assist with, manage, or settle any claims on your behalf or on behalf of your insurer. Coverage for claims on the policy is determined by the insurer, and not BizCover.
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