Understanding the difference between Public and Product Liability insurance

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Understanding the difference between Public and Product Liability insurance

Running a small business means there’s many different risks which you may be exposed to. From market stall owners, mobile dog groomers and all types of tradies, the term Public Liability insurance* isn’t something new. But when it comes to the difference between Public and Product Liability insurance do you know what you’re really being covered for?

We’re put together this simple guide that explains the basics of what you need to know when it comes to protecting your small business with Public and Product Liability insurance.

What is Public Liability insurance*?

Public Liability insurance is designed to provide protection for you and your business in the event a customer, supplier or a member of the public brings a claim against you due to them being injured or sustaining property damage as a result of your negligent business activities.

As a small business owner, you have an element of responsibility to ensure that you create a safe environment for not only yourself and workers to be in, but for third parties like customers and suppliers too.

Even if you put all the right steps in place to check and maintain a safe business environment, accidents and incidents can still occur. Here are some examples of when Public Liability insurance can provide some much-needed protection:

  • Retailers may have innocently left some boxes of stock in the aisle of their store, customers can easily trip over these causing injury.
  • If you are visiting a client or working on their site and cause accidental damage to their personal property e.g., accidentally spilling a coffee on their laptop
  • A supplier visits your business premises and falls down the stairs injuring themselves

What is Product Liability insurance*?

Product Liability insurance* is designed to protect your businesses against claims which come from third parties for incidents relating to property damage or personal injury caused by your products. Product Liability insurance usually forms part of a Public Liability policy. Policies can vary so the word ‘product’ will be specifically defined in your policy’s wording.

One of the general policy definitions of a product is the following. A product includes anything that has been manufactured, constructed, erected, assembled, installed, grown, extracted, produced, processed, treated, altered, modified, repaired, serviced, bottled, labelled, handled, sold, supplied, re-supplied, distributed, imported or exported by you, or on your behalf.

The types of businesses which may need to consider Product Liability insurance include those which supply or distribute products within Australia.

Examples of some of these kinds of businesses include:

  • Manufacturers
  • Cafes and restaurants that sell food products
  • Market stalls selling products
  • Hair and beauty businesses selling products

A product liability claim can easily arise from:

  • A fault in the products which you are manufacturing
  • Defects that occur in the design of the product

What is the difference between Public Liability and Product Liability insurance?

While both forms of liability insurance are designed to protect your business if a claim from a third-party were to happen, both are very different types of business insurance coverage.

Products Liability insurance usually forms part of your Public Liability insurance and has a separate limit from your Public Liability policy. It is important that you check what business activities and the limit of cover that you have in place.

In a nutshell, Public Liability covers your business from accidental claims that arise from business activities that may cause injury or damage to a third-party’s property. Product Liability covers your business from accidental injury or damage to a third-party’s property from the products provided by your business.

Did you know?

Even if you import components that may be manufactured overseas to help create your products, you have a responsibility if there is an issue with those components? This responsibility is outlined under the Australian Consumer Law Act.

Getting your Public and Product Liability insurance sorted

No matter if you’re a candle maker or coffee shop owner, getting your Public and Product Liability insurance is drama-free with BizCover. Get peace of mind knowing that you have cover in place should the unexpected happen without the hassles.

We provide multiple quotes from some of Australia’s most trusted insurers in minutes, so you can select the cover that will suit your business. There’s no paperwork or hard-to understand insurance jargon, just insurance made easy. Get your quote today.

* 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.

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