You may have Public Liability insurance* (PL) as a small business owner. But did you take the time to truly understand what you are and are not covered for? If you didn’t, then you may have made some assumptions about what your Public Liability insurance covers.
Some small business owners may believe that PL covers their employees if their injuries are caused by their work. However, these injuries may actually be covered by Workers Compensation insurance.
So, to help clear up the confusion, let’s compare Public Liability and workers compensation and uncover the differences and similarities between the two that business owners can benefit from learning. We will also answer some other key insurance for employees questions, such as does Public Liability cover contractors.
What does Public Liability insurance cover?
Public Liability (also referred to as Personal Liability) covers you and your business if you are held responsible for personal injury to a third-party, or damage to their property in the course of business.
If someone slips and falls in your business premises, they could sue you if they think that your business was responsible for their injuries. If so, you could face costly legal fees and potential compensation.
PL protects your business against the financial impact such events can have. This can cover legal fees for defending yourself, as well as any compensation that you may be required to pay. As such, this can be a critical type of business insurance to have if your business involves interacting with people.
What is not covered by Public Liability insurance?
PL does not cover certain events. If your business is responsible for a claim that does not include injury or damage to property, your PL policy will not cover the loss.
PL will not cover you or your company if you have knowingly or deliberately damaged or injured someone else or their property. There are also some incidents that are not covered by PL because they fall under a different business insurance policy.
If your business offers advice or a service to clients, PL won’t cover claims of professional negligence where a client alleges that your advice or service caused them a loss.
However, Professional Indemnity insurance (PI) may cover this. As stated above, PL does not cover injuries caused by your employees due to the work they do for you. This would typically be covered by Workers Compensation insurance.
What is Workers Compensation Insurance?
Workers Compensation insurance covers your employees in the event of an accident at work. This type of business insurance is intended to cover the medical costs and rehabilitation, as well as the employee’s income loss while they are not able to work due to the injury.
Workers Compensation is required by law in Australia for any company that employs employees. The requirements vary from state to state and territory, so be sure to check with your local authority for more information.
The similarities between Public Liability and workers compensation
Public Liability and Workers Compensation are similar in that both are insurance for employees policies that cover personal injury. Both policies cover legal costs and compensation for businesses that are found liable.
The differences between Public Liability and workers compensation
Workers Compensation will only cover workers (including contractors and sub-contractors in certain circumstances) and provides coverage if they sustain an injury during the course of their employment.
However, Public Liability on the other hand is intended to cover third-party injuries caused by your products or business activities. Customers, visitors, or suppliers are covered by Public Liability, but not your employees.
Public Liability vs Workers Compensation: Which policy should you choose
When deciding between Workers Compensation and Public Liability, remember that Workers Compensation will only cover workers (including contractors and sub-contractors in certain circumstances) and provides coverage if they sustain an injury during the course of their employment.
Public Liability on the other hand, is intended to cover third-party injuries caused by your products or business activities. Customers, visitors, or suppliers are covered by PL, but not your employees.
Workers Compensation is different from PL in that it only covers property damage caused by a company’s actions or omissions. If an employee’s personal property is damaged during the course of work, no coverage is provided under Workers Compensation.
While there are many similarities between Public Liability and Workers Compensation, there are also key differences that you will benefit from understanding before purchasing either of these business insurance products.
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