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Public Liability Insurance

Written by

Shaun McGowan

What is public liability insurance?

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.

How does public liability insurance work?

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:

  • Providing cover for damage caused to another person’s property
  • Providing cover for injury or death caused to another person

While certain policies may vary in cover, most public liability policies will generally cover:

  • incidents that occur on your business premises; and
  • incidents that occur off-site which are organised by your business

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.

What does Business Insurance cover

What does public liability insurance cover?

Public liability insurance policies cover a range of costs associated with claims resulting from damage to either property or individuals, including:

  • The cost of legal fees
  • The cost of damages
  • The cost of any investigations resulting from a claim

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:

  • $5 million
  • $10 million
  • $20 million

Public liability insurance covers you for incidents related to anyone - except your own employees - who may interact with your business, including:

  • Individuals visiting your business
  • Customers and clients
  • Individuals taking part in events or activities you have organised
  • Individuals observing events or activities you have organised
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Money Tip: Public liability insurance can provide cover in the event of damage to property or injury to others - even in the event of negligence or faulty workmanship - provided the cause wasn’t unlawful or deliberate.

How does public liability insurance work?

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:

  • Employee injuries - this is covered under compulsory Workers’ Compensation Cover.
  • Any unlawful activity
  • Any deliberate act to cause damage or injury
  • Property damage suffered by you or your employees

There are also exclusions on some policies which are relevant to certain occupations and business types, including incidents arising through work conducted on:

  • Marine vessels over a certain size
  • High-risk locations such as airports and mines
  • Construction projects over a certain size

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.

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Money Tip: Always check to see what your specific policy does and does not cover, especially if you perform duties which are outside the normal expectations or commitments of your profession.

Who needs public liability insurance?

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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Money Tip: Many trades have mandatory public liability requirements, particularly those that must operate under a state government-issued licence such as an electrical or plumbing contractor.

Most common businesses and trades using public liability insurance

A - FG - OP - Z

Accountants

Garden Designers

Plasterers

Aerial Installers

Gardeners

Printers

Agricultural Contractors

Graffiti Removalists

Project Managers

Alarm Installers

Grit Blasters

Painter & Decorators

Arborists

Glaziers

Pavers

Architects

Gas Fitters

Pipe Fitters

Beauticians

Gravediggers

Plumbers

Bricklayers

Groundworkers

Partitioning Contractors

Builders

Health & Safety Advisors

Restaurant Business

Carpenters & Joiners

Hydraulic Engineers

Insurance

Caterers

HVAC Technicians

Removal Contractors

Commercial Property Owners

Industrial Plant Repairer

Roofing Contractors

Cleaners

Interior Designers

Real Estate Agents

Cafe Insurance

Joiners

Refrigeration Engineers

Carpet Layers

Kitchen Installers

Shop Fitters

Ceiling Installers

Lift Engineers

Shuttering & Formwork

Concreters

Mortgage & Finance Brokers

Contractors

Data Cable Installers

Metal Fabricators

Sign Makers & Erectors

Demolition Contractors

Offices

Solar Panel Installation

Domestic Appliance Repair

Hr & Recruitment Specialists

Steel Reinforcers

Drain Cleaners

Hairdresser

Stone Masons

Drilling Contractors

Heating Contractor

Surveyors

Engineers

Hydraulic Engineers

Scaffolders

Electricians

Insulation Contractor

Solid Fuel Installation

Fire Alarm Installers

Kerb & Paving Layers

Sprinkler Installers

Florists

Landscaping Contractors

Tilers

Forklift Operators

Manufacturers

Wholesalers

Fencing Contractors

Mobile Hairdressers

Telco Engineers

Forestry Contractors

Office Furniture Installation

Welders

Window Cleaners

Public liability insurance for tradies

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:

  • Many worksites operated by building and construction companies will have mandatory public liability requirements for all subcontractors working on a site.
  • Some tradesmen will require mandatory public liability insurance due to licensing requirements of their trade based on the state they operate in.

Common examples for mandatory public liability insurance include:

  • Electricians in Queensland and Tasmania (consumer protection cover)
  • Plumbers in Victoria (plumbers warranty cover)

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.

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Money Tip: Even if public liability cover is not mandatory for your situation, it can still be an effective way of protecting yourself as a tradie.

How much is public liability insurance?

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:

  • The type of trade
  • The size of the business in relation to its revenue and employees

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.

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Other types of insurance cover for trades

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:

  • Workers’ Compensation Cover
  • Third party Personal Injury Insurance
  • Professional Indemnity Insurance
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Money Tip: Many tradies taking out public liability insurance may also consider various types of vehicle insurance and personal accident & illness cover. General business insurance may also be considered to provide cover for work-related tools.

Where to get public liability insurance in Australia

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.

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Money Tip: An insurance broker uses their expertise to identify the various risks a tradie or business may be exposed to, then match these with an appropriate insurance policy from a range of insurers.

Summary

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.

FAQs

How much does public liability insurance cost in Australia?

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.

What does public liability insurance cover?

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.

What does public liability insurance not cover?

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.

What happens if you have no public liability insurance?

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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About the Author

Shaun McGowan from money.com.au

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.

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