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It becomes vital for businesses to protect themselves, with people increasingly turning to the courts to seek financial compensation for damages due to companies' negligence.

There is no other business insurance more popular in Australia than a public liability cover for businesses for sectors that deal with the public. The insurance protects a business against accidental loss or injury occurring while running a business.

In this guide, we take a closer look at what is public liability insurance in Australia, who it is for, and what benefits it offers to Australian businesses.

1. What Is Public Liability Insurance?

Businesses open to the public are most vulnerable to third-party accidents leading to expensive public liability claims. To avoid heavy fees and continue normal business operations, it is vital to have adequate coverage for your business.

Public liability insurance safeguards your business against claims resulting from injuries or accidents due to careless business operations to somebody else.

It protects a business if a person (including a customer, supplier, or public) gets injured or their property gets damaged while dealing with it. The insurance covers expenses a business incurs for legal settlements and fees to defend a claim.

2. What Is Public Liability Insurance For Businesses?

Small business owners are legally responsible for taking reasonable steps to ensure the safety of society, their clients, and vendors during their activities on their premises.

When a small business faces a public liability claim, it is accountable to pay the claim amount and associated legal fees. Failing to have the necessary insurance can lead to contract cancellation from other businesses.

Moreover, you need to pay for the claim and legal costs to avoid putting your business assets at risk.

That's why you need to consider public liability insurance for small businesses to provide adequate financial protection and ensure the normal functioning of your business.

3. What Is Public Liability Insurance In Construction?

Most states in Australia require construction businesses to have mandatory public liability insurance.

It protects a business against third-party claims related to the following: slips, trips, falls, hurts, and injuries due to your negligent business operations on-premises or damage to a third-party property while providing a service.

They may take legal action against your business to recuperate their loss. Construction companies need higher public liability insurance than other businesses due to their larger workforce and risk to the public.

Additionally, the other non-domestic occupiers, such as electricians and plumbers, need a state government-issued licence to execute their work.

4. What Is Public Liability Insurance For Landlords?

It is also compulsory for landlords to have public liability insurance to cover the claim cost if any injury happens to tenants, visitors, or tradespeople. This is when they damage belongings or install faulty equipment on their rented property.

Things that can cause unfortunate events and result in claims include:

• A loose carpet/floorboard

• Leaking pipes or unrepaired leaks

• Uneven flooring/pathways

• A visible camera within the property or hidden within the walls that captures the tenants 

• Damaged windows or stairwells

• Faulty electrical goods

5. Inclusions And Exclusions Under Public Liability Insurance

Before buying any insurance policy, read the Product Disclosure Statement carefully or talk to the insurer to learn about the inclusions and exclusions in the policy.

Public Liability insurance DOES Cover The Following:

• Legal and defence costs incurred to settle a claim.

• Cover for suppliers or tradespeople working for your business involved in performing business operations at the time of the incident 

• Cover for customers or any public member using your business' services on your business premises

• Damage or loss of your business goods 

• Damage or loss of someone else's property while performing your service.

• First aid expenses during the accident

• Injury to others who visited your premises during the incident

 The Public Liability Insurance DOESN'T Cover The Following:

• Personal injuries to you or your business' employees

• Any damage that you or your business' employees did to your business property

• Cyber-attacks on a business

• Someone makes allegations to tarnish your business' reputation 

• Incidents that involve Asbestos

• Aircraft products

• Punitive damages 

• Advertising Injury

• Liquidated damages

• Pollution

• Product recalls and withdrawals 

• Events that take place before or after the policy duration 

• Costs to repair defective equipment.

• Illegal activity

• Contractual liability

6. Who Should Take Public Liability Insurance?

Public Liability Insurance could be a legal requirement before issuing licenses for specific trades or commencing the job. It is essential to all those businesses that deal with the public.

It is for businesses and professionals who directly interact with customers, clients, the public, and companies operating in public spaces. 

The insurance protects them financially if they are liable to pay monetary compensation for third-party injuries or property damage during their operation.

Some of the industries that must have public liability insurance are:

• Trades

• Retail

• Hospitality

• Health

• Real estate

• Entertainment

• Transportation

• Construction

• Café owners and restaurateurs

7. Top Insurance Providers For Public Liability Insurance

Australia has a diverse public liability insurance market leading to better coverage and affordable premiums for most types of business.

Here are some of the largest providers that offer public liability insurance:

Out of the above insurers, Calliden, QBE, Vero, and CGU are owned and operated in Australia. 

Zurich and Allianz are overseas insurance companies (Swiss and German) but have a robust presence throughout Australia over several years and have insured countless local businesses.

8. Is Public Liability Insurance Mandatory In South Australia?

According to , public liability insurance isn't a legal obligation. However, you should have it if you run a business with public contact that involves accidental risks. Some of these include:

• Tradies

• Trade businesses

• Retail and Hospitality

• Professionals that interact with clients

On the contrary, those who work from home, and do not require physical interaction with people, may not need public liability insurance.

9. What Is Public Liability Insurance in NSW Requirement?

Many businesses in NSW have a compulsory licensing requirement to have public liability insurance to protect themselves.

The insurance can protect various businesses and workers around NSW, including sole trader cleaners, sub-contractors, large national companies, trade and construction firms, real estate firms, shopping centres, and commercial offices.

According to , everyone who works on your building should have current and valid public liability insurance.

Suppose the tradesperson or builder doesn't have it. In that case, the property owner could be accountable for compensating for the injuries or losses for the business activity performed on your property.

The policy covers NSW businesses and their employees from the claim cost, including medical expenses, repair, rehabilitation, and other financial compensation for injuries or property damage suffered by another person.

10. What Is Public Liability Insurance in QLD Requirement?

The  says you don't necessarily need public liability insurance. It is only required if your company owns the land, rents, or holds it in a trust.

Also, when working with your customers or clients in public spaces, it becomes essential to have public liability insurance against costly property damage or injury claims.

11. How Much Public Liability Insurance Do You Need?

Takes various factors when determining the public liability insurance premium price.

Businesses with operations, such as rock climbing, have a greater chance of injuries and need public liability insurance than low-risk businesses like a florist.

Here are the common factors that determine the cost of policy premiums:

Business Size (By Annual Revenue, Number of Employees, And Staff)

Larger businesses need to pay higher premiums as the chances for damage, or injury are higher.

Business Type/ Type of Trade/ Occupation

The insurance premium will be higher if your business has high-risk operations.

A company that operates in airfields, excavation sites, building sites, and large-sized infrastructure projects is considered riskier and attracts higher premiums.

How Dependent A Business Is on Subcontractors

A business that employs subcontractors attract higher cost as a significant portion of the revenue goes into paying them.

Level of Cover You Need

The extent of coverage you need also impacts the premium cost.

Public liability covers are generally available in 3 levels ($5M, $10M, or $20M), where the minimum policy limit is $5 million. The maximum limit is $20 million.

Policy Structure

You could cut your premium cost by bundling public liability insurance with another kind of insurance or choosing a higher excess.

Thus, the larger the business and its risk of causing damage or injury, the higher the cost and premiums of public liability insurance. A public liability insurance calculator is a great tool to determine the public liability cost for your business.

Using this tool, you can compute the cost of your public liability insurance suggesting a few appropriate policies for your requirements.

12. Do You Get Tax Benefit On Public Liability Insurance?

Not only does the insurance protects you from financial losses, but it is also tax-deductible, as the payment towards insurance premiums is considered a business expense. 

According to the Australian Taxation Office, businesses that own public liability insurance receive a tax invoice at the financial year-end to claim the expense.

13. Are Public Liability Insurance And Professional Indemnity the Same?

Public liability insurance covers a business for its negligent operations and faulty equipment leading to damage or injuries to a third party. 

On the other hand, professional indemnity covers financial claims for monetary damage or losses caused due to wrong business advice or recommendations.

If you have a business where customers visit the premise seeking specialist advice, both Professional Indemnity Insurance and Public Liability could benefit you.

14. Does A Self-Employed Need Public Liability Insurance?

Public liability insurance is for self-employed people who have a business where they meet clients or the public.

15. Does An Employee Need Public Liability Insurance?

Suppose your employer has current and valid public liability insurance covering the actions of its employees and staff. In that case, you don't need to take out a policy.

16. What Is Sole Trader Public Liability Insurance In Australia?

Suppose you work as a sole trader, freelancer, or sub-contractor who interacts with people regularly. In that case, there are chances that you can have a claim raised against you for injury or damage by a third party.

You must cover the litigation costs and settle a claim without public liability insurance. It can be a blow to your finances and could risk your assets.

It is wise to have public liability insurance for a sole trader before entering a new business contract or working at any site.

17. Can One Buy Public Liability Insurance Online?

Yes. You can buy public liability insurance online. For this, you will need to provide details about your business to the broker of the insurance provider. The points can include the following:

• Your occupation or trade

• Your business size (by revenue or staff numbers)

• Do you use subcontractors, and to what extent do you use them? 

• Is your business exposed to risky work locations or activities?

• How much insurance coverage do you require ($5M, $10M, or $20M)?

The above information helps the broker get a basic idea of your business and insurance needs. With too many insurance service providers, they help you identify the best policy that provides appropriate coverage at a competitive price.

Based on the business details, the broker will provide you with an online quote for public liability insurance to give you an idea of the costs involved.

They may suggest a few options to reduce the insurance cost, such as increasing the excess, reducing the benefit limit, and opting for an insurance package.

18. Should A Subcontractor Need Public Liability Insurance?

Public liability insurance only covers the financial claims made against the business for the damages caused by the employees to customers or the public on the business premise.

They do not automatically cover subcontractors who get injured on the job. Subcontractors may work for more than one company, and adding them to the policy will increase the premium cost.

They should talk to their employer about whether they are covered when something happens.

Subcontractors should have income protection and public liability insurance. In Australia, several insurance brokers offer this insurance.

19. Conclusion

Public liability is the essential insurance that any business should have to mitigate claims. Besides covering financial losses, adequate insurance provides peace of mind and saves years of hard work.

Furthermore, with the affordable cost of public liability insurance, there is no excuse for not buying it. However, businesses should rely on more than just public liability to cover every risk. It should be bundled with various other covers to ensure complete protection for any event.

Speak to an insurance provider or broker for the most suitable liability insurance.

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