A sole traders guide to understanding Public Liability Insurance

Working for yourself brings with it the freedom and opportunity to follow your business dreams and goals, giving you control of your business’ future. But with freedom also comes the responsibility of protecting and ensuring your sole trader business is going to be around the long run.

Whether you’re a tradie, a bookkeeper or yoga instructor, Public Liability insurance is one of the fundamental types of insurance you need to consider when it comes to safeguarding your business. In our guide we explore some of the key things you need to know about Public Liability insurance and how it can protect your sole trader business.

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 their being injured or sustaining property damage as a result of your negligent business activities.

It is one of those main types of business insurances that is often required by many different types of professions and industries. If you interact with third-parties, members of the public or suppliers than getting your Public Liability insurance sorted should be high on your never-ending to-do list!

Your Public Liability insurance will typically extend to provide cover for Product Liability insurance cover*, but it is always a wise move to check with your insurance provider to make sure it is included in your coverage.

What is Product Liability insurance?

Product Liability insurance is important to consider if your business sells products which have 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.

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. Reasonable costs incurred in defending a covered claim will also be met. It is typically part of a Public Liability policy.

What will my Public Liability insurance policy typically cover and exclude?

The fine print of what is covered and excluded in your Public Liability insurance policy is outlined in your Product Disclosure Statement, something which your insurer can provide a copy of. It is important to become familiar with this as policies can vary from insurer to insurer.

Your Public Liability insurance policy will typically provide compensation for:

  • Personal injury suffered by a third party (e.g., a customer, supplier or member of the public)
  • Damage to property owned by a third party due to your negligent business activities
  • Legal and defence costs associated with a covered claim

Your Public Liability insurance policy will typically not provide cover for:

  • Injuries to your employees
  • Damage to your own property
  • Costs of rectifying faulty workmanship
  • Professional negligence
  • Contractual liability
  • Events occurring before or after the policy period

Why do sole traders need to consider Public Liability insurance?

As well as providing peace of mind, Public Liability insurance can help your sole trader business in the following scenarios, where is may also be a requirement.

  • If you are renting your business premises, you may need to have a minimum level of Public Liability insurance in place as part of your rental agreement
  • It may be a requirement to become a member of certain professional boards and organisations
  • If you work on contracts, part of your agreement may be that you have Public Liability insurance

Examples of when sole traders may require Public Liability insurance

This is just a snapshot of some of the types of scenarios when you may need Public Liability insurance as a sole trader.

Working from a home-based office– Even though your office is based at home, there is always the risk of a client accidentally injuring themselves on your property. The reality is, if a client, supplier or member of the public were to injure themselves, the impact from a claim could have a significant impact on your finances. Public Liability insurance provides protection even if you are a home-based business.

Operating a mobile business– Public Liability insurance provides protection for your sole trader business anywhere in Australia, giving you reassurance that you are covered no matter where you may be doing business in this great southern land.

Running a Market stall– It is often a requirement for market stall holder to have a minimum level of Public Liability insurance when doing business at a market. If you are selling products you have made at your stall, make sure that your Public Liability insurance policy includes coverage for Product Liability.

Things to consider when purchasing your sole trader Public Liability insurance

There are plenty of different Public Liability insurance policies available in the market, so how do you know what is going to be the most appropriate one for your sole trader business? Here are a few things to keep in mind when shopping around for your sole trader Public Liability insurance.

Are my business activities covered?

This is an important one to check, because the last thing you want to find out come claim time is that certain activities related to your business are not covered by your Public Liability insurance policy. If you’re unsure always check with your insurer.

Do I have adequate cover in place?

Taking the time to understand the potential risk and involved costs that your sole trader business may be exposed to can help you calculate an adequate amount of coverage your business may require.

Am I required to have a certain level of cover?

Each state and territory have their own laws when it comes to legal requirements and Public Liability insurance. For example, some trades may request that you have your Public Liability insurance in place before you can get a license.

What is my risk management plan?

Part and parcel of running your sole trader business is ensuring that you strategies in place to help minimise your business’ exposure to risk. Creating a safe and secure working environment can also impact your Public Liability insurance policy.

Keep these tips in place when looking at ways to secure your business

  • If an incident were to occur, make sure you have a safety plan in place
  • Extra measures like sprinkler systems, alarms and CCTV cameras can help to improve the safety of your business
  • Regularly check your business premises for any potential threats like overhanging trees, loose pavers and any hazards that could cause an accident

Getting your sole trader Public Liability insurance sorted

The next step is getting your Public Liability insurance sorted for your sole trader business, a process which doesn’t need to involve countless hours searching multiple websites and ringing around for the best deal, because nobodies got time for that!

Experience drama-free insurance with BizCover, where we do the shopping around for you. We round up multiple quotes from a great range of trusted Australian insurers and deliver them straight to your inbox. Simply select your preferred cover and hey presto, you’ll be covered in minutes with a messy form in sight.

Get quotes to start covering your sole trader business with Public Liability insurance 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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