Public Liability Insurance Explained
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.
Small business owners have a legal responsibility to take reasonable steps for the safety of their customers, suppliers and the community, and for their property.
Most Public Liability policies also extend to cover Product Liability. If you sell, supply or deliver goods, even in the form of repair or service, you may need cover for negligence claims against you where your product has caused injury, death or damage.
Even the most careful businesses run the risk of injuring someone or damaging something during the course of their operations.
Chances are like many other small businesses, if you were faced with a Public Liability claim, the financial impact of paying the claim and associated legal fees (including defence costs) could potentially send you out of business. That’s why you could consider Public Liability insurance to provide the financial protection your business deserves.
*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.
What does Public Liability insurance typically cover?
Like most insurance policies, it is always important to check what you are covered for exactly. If you are ever unsure, refer to the Product Disclosure Statement (PDS) or chat with your insurer.
Personal injury suffered by a third party (e.g. a customer, supplier or member of the public)
If your business interacts with people on a regular basis, there is always going to be the chance of a potential claim occurring. Accidents can happen in the blink of an eye, from a client accidentally tripping over a box of stock in a retail store to a beauty professional using a product that causes a reaction to their client’s skin. No matter how unintentional, the impact of a claim can have a big impact on your business – a worry you can do without.
Damage to property owned by a third party due to your negligent business activities
This covers things like accidentally causing damage to your clients’ personal property, like spilling food and damaging their clothing, mobile phone, etc. It may also provide protection for professions like tradies where physical works are being done at a client’s property and things don’t go to plan, like accidentally bursting a pipe and causing damage.
Legal and defence costs associated with a covered claim
Covers your legal expenses which may be involved with your claim, which can quickly add up, especially if your claim goes on over a lengthy period of time.
**Many Public Liability policies also provide cover for product liability.
What does Public Liability insurance typically not cover?
- Personal injuries to you or your employees
- Damage to your own property
- Costs of rectifying faulty workmanship
- Professional negligence or unlawful activity
- Contractual liability
- Events occurring before or after the policy period
- Asbestos
- Advertising injury
- Pollution
- Reckless or wilful failure to take care
Do I really need Public Liability Insurance?
Public Liability insurance is a fundamental type of cover that many different types of business may find themselves requiring. Not only does it provide peace of mind, but it provides protection for your business’ hard-earned reputation and finances.
These are some things to consider:
- If a claim(s) were to occur, could your business afford the related legal expenses as well as compensation if awarded? The last thing you want to do is put your personal finances in jeopardy to pay for the incurred debt as a result of a claim.
- For some types of businesses, it may also be a legal requirement to have Public Liability insurance in place before starting on the job. Sometimes a specific minimum level of cover may be specified, so make sure you have enough cover in place.
If you are renting a space for your business, having Public Liability insurance may also be a requirement of your rental agreement with your landlord.
Recommended reading: Do I Need Public Liability Insurance?
What could a Public Liability claim result from?
There is plenty to think about when you run your own business, and the last thing you want to be worried about is the potential threat of a Public Liability claim. These are some examples of situations where a Public Liability claim may occur.
- Injury to or death of third parties as a result of your negligent business activities
- Damage to a third party’s property as a result of your negligent business activities
- Financial loss directly caused as a result of your negligence
- Inappropriate installation of equipment causing damage to property
If your business interacts with members of the public, clients or suppliers in any capacity, then there is always a risk a claim may arise. Let’s take a look at some industry specific examples of when a claim may occur.
Tradies – Trade businesses have the potential to cause damage to property when carrying out works, like accidentally spilling paint all over the carpet. This is where cover for rectification of faulty workmanship can assist.
Retail and Hospitality – Working closely with both customers and suppliers means slips, trips and falls are often risks that these types of businesses are faced with each day. When providing food services gets thrown into the mix, there is also a risk of things like claims for food poisoning to consider, something which the Product Liability section of your Public Liability policy could provide protection from.
Professionals – For many professionals, there are a variety of ways to interact with clients. Maybe you have a home office established where clients visit you, or you’re out visiting them at locations. Either way, Public Liability is still important to consider, especially if your client were to trip and injure themselves at your property or if you were to accidentally cause damage to their personal property.
Could this happen to your business?
Accidents can happen anywhere, anytime.
Don’t believe us? Here is a real-life claims example.
Graphic Design Business – NSW
A client visiting a graphic design business fell down a dip whilst walking through a doorway at the business premises, sustaining a hair-line fracture and ligament damage to her left foot.
The customer commenced legal proceedings against the graphic design business to recover damages for pain and suffering, the cost of medical treatment as well as the loss of income whilst she was unable to work. The customer alleged that the dip was a risk to customers like her, that was foreseeable to the business yet the business left the dip unrectified. The Public Liability insurer appointed assessors to conduct an investigation and appointed lawyers to act on behalf of the business in defending the claim. The claim was resolved in favour of the customer with a payment made to her of $75,000 as well as defence costs (to the assessor and lawyer) of $30,000. Without the Public Liability insurance, the graphic design business would have been liable for over $100,000!
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. Coverage for claims on the policy will be determined by the insurer, not BizCover.
