Public liability insurance is a type of business insurance commonly used by tradies and business owners in Australia. It provides financial cover in the event that your business activities result in property damage, or personal injury to a member of the public.
Where business activities result in property damage or personal injury to another person not employed in the business, a claim can be brought against the business suspected to be responsible. Public liability insurance works by:
While certain policies may vary in cover, most public liability policies will generally cover:
If the claim is successful, and the business is found to be responsible for damage to property or harm caused to the public, the resulting payout can be of significant value. In the most severe cases, this amount could be millions of dollars or greater.
Public liability insurance policies cover a range of costs associated with claims resulting from damage to either property or individuals, including:
In Australia, the minimum amount of public liability insurance cover available is $5 million. There is no set maximum limit, however most insurers offer three main levels of cover:
Public liability insurance covers you for incidents related to anyone - except your own employees - who may interact with your business, including:
Similar to other types of insurance, many public liability insurance policies will have a range of exclusions. Generally, a public liability insurance policy will not cover the following events:
There are also exclusions on some policies which are relevant to certain occupations and business types, including incidents arising through work conducted on:
Most public liability insurers will not cover these situations. However, there are many specialist insurance providers which may provide cover through specially designed policies, albeit at greater cost to the policyholder.
If a business in Australia operates in a manner where its operations could cause property damage or personal injury to others, then public liability insurance is generally considered as a core part of its insurance policy.
Depending on which Australian state the business operates in, and which industry the business is classified within, there may also be certain obligations on the business to obtain public liability insurance:
Many trade occupations and businesses must hold public liability cover to obtain a contractor’s licence.
Many tradies are also required to hold public liability in order to enter the worksites of some building and construction companies.
Self-employed and subcontracting tradies will often consider public liability insurance, as they will not be covered by a policy held by the contracting company.
Landlords may require business tenants to obtain public liability insurance as part of their tenancy contract.
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Public liability insurance is important for tradies in Australia, whether they are working as subcontractors or are self-employed, as they are wholly responsible for their actions on-site and any property damage or personal injury to another person as a result of their work:
Common examples for mandatory public liability insurance include:
If you do not comply with the mandatory requirements of the state and do not hold a current policy, you will be unable to apply for - or renew - your contractors licence.
The cost of all types of business insurance is called a premium, and varies between policies and insurers. Public liability insurance costs are generally relative to the potential risks associated with your trade - the riskier the work you do, the higher your premiums will be.
The two biggest factors affecting premiums for tradesmen are:
In general, any trades which operate in hazardous locations - such as mines or airports - will often incur much higher premiums than those which do not. You can learn more about premiums and the cost of business insurance in our guide.
Public liability insurance is only one type of business insurance available in Australia, some of which are compulsory depending on how your business operates, including:
Public liability insurance is available through authorised insurance companies. Alternatively, you may wish to speak to a licenced insurance broker to find you a suitable policy at the most competitive rate. Insurance brokers must be licensed and listed on the Australian Securities & Investments Commission's professional register.
Brokers will charge a fee for their services, however working with a broker can greatly reduce the time spent comparing insurance options, while ensuring all appropriate cover for a business is included in its selected policy.
Public liability insurance is essential for your business if you have clients or customers visit your premises, or if you conduct work in public spaces or at worksites as part of your trade. It is also a crucial form of insurance for self-employed tradesmen and sub-contractors.
Public liability insurance protects you in the event that a person or their property is harmed in an accident, either at your workplace or as a result of your business operations.
The amount you pay for public liability insurance in Australia will vary in relation to the level of risk your standard business operations present to an insurer. For example, you will pay higher premiums for your insurance if you work in demolition, than if you worked in a stand-alone office environment.
Public liability insurance covers property damage or personal injury to another person not employed in the business, which occur as a result of your business operations. This can include people visiting your premises, damage to a client’s property in any form, or injury which occurs as part of an event you organise.
Each individual public liability insurance policy will include certain exemptions for cover, which indicate under what circumstances you will be ineligible to make a claim. In general, any damages which occur as the result of deliberate intent - i.e. on purpose and not by accident - will not be covered.
If a business has no public liability insurance cover, it is at risk of paying damages which occur as a result of its business operations. This can be as low as a few hundred dollars - e.g. breaking a vase - and as high as millions of dollars - e.g. severe injury caused by poor workmanship on an apartment complex.
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Shaun
McGowan
Shaun McGowan
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.