Public Liability Insurance for Your Business Explained

Public liability insurance is a type of insurance that protects your business from financial losses in case of accidents or injuries to third parties. This means if someone gets hurt or their property is damaged because of your business, you'll be covered.

Public liability insurance typically covers damages up to a certain amount, usually ranging from $1 million to $10 million. This amount can vary depending on the type of business and the level of risk involved.

As a business owner, you're likely to be liable for accidents or injuries that occur on your premises, during events or activities, or even while your employees are working on-site.

Public Liability Insurance is designed to help cover you and your business in case a client or member of the public holds you liable for personal injury or property damage.

The costs associated with such claims can be very high, with the average slip and trip claim in Australia falling anywhere between $40,000 and $100,000.

Public Liability Insurance is meant to cover the cost of defending you, as well as any compensation you might be required to pay.

This type of insurance is crucial for businesses that interact with the public, as it can help protect them from costly claims.

For example, a client visiting your premises may slip and fall, suffering an injury and taking legal action against you.

In some cases, Public Liability Insurance is even a mandatory cover for certain professions, and some clients may require you to hold it before they work with you.

The shopping centre where Margaret* slipped and fell had Public Liability Insurance that covered the cost of legal representation and compensation.

Public Liability is often available as a combined policy with Product Liability, which is designed to help cover businesses that manufacture, sell or supply products.

If you're wondering who needs public liability insurance, the answer is quite straightforward. Any business that has interactions with members of the public in person should consider it.

Even if you operate your business online or from home, you may meet with clients or potential clients in person at some point, which carries a risk of injury or property damage.

If you're self-employed, you may still need public liability insurance, especially if you have physical interactions with clients or customers.

The key question to ask yourself is whether you have physical interactions with members of the public or your clients while providing your service or operating your business.

Businesses that regularly deal with the public, such as public speakers, musicians, and entertainers, should also consider public liability insurance.

Even if you conduct business online, you'd still benefit from public liability coverage since you interact with people when receiving deliveries or picking up supplies.

LLCs might need general liability insurance to fulfill certain contracts, such as a lease, and it's a good idea to have a general liability policy to protect against lawsuits and expensive claims against your business.

Public liability insurance covers the cost of third-party injury and damage claims attributed to your business, including incidents at your business and locations related to your work.

Some events are not covered under public liability insurance, known as exclusions. These can include financial losses due to advice or services provided, losses from cyber attacks, damage to property from theft or natural disasters, and injuries or losses suffered by you or your business.

Here are some incidents that are typically not covered under public liability insurance:

A claim under public liability insurance will usually cover two types of costs: legal costs and financial compensation.

Public liability insurance is not a comprehensive protection for your small business, but it's a good starting point. You'll likely need to combine it with other types of insurance to get full coverage.

General liability insurance is a must-have for almost any type of business. It covers claims of personal and advertising injuries, including libel, slander, copyright violations, and invasion of privacy, as well as premises liability and legal fees.

You should consider other types of business insurance to complement your public liability policy. Here are some examples:

The cost of Public Liability Insurance is determined by a combination of factors, including the industry your business is in and the nature of your service.

The industry your business is in plays a significant role in determining the premium, with businesses that offer action or sporting experiences often having higher premiums than office-based businesses.

Your business's location is also a factor, with businesses in busy towns serving high volumes of customers every day likely to have higher premiums than those in quiet towns.

The size of your business and the number of employees you have are also taken into account when calculating the premium.

Calculating how much public liability insurance you need can be a bit tricky, but it's essential to get it right. The cost of public liability insurance can vary depending on the size of your business, level of interaction with the public, and the type of industry you're in.

To determine how much cover you require, consider the possible extent of compensation claims and how much it could cost to repair any damage. Factors such as the size of your business, level of interaction with the public, scale of contracts, claims history, and the level of risk associated with your industry all play a role.

The amount of cover you need will depend on these details. For example, if you're a small business with a low level of interaction with the public, you may not need as much cover as a larger business with a higher level of public interaction.

Here are some factors to consider when determining how much public liability insurance you need:

Don't forget, having a public liability policy isn't compulsory, so how much cover you take out is up to you. It's always better to have more cover than you think you'll need, rather than not enough.

The cost of Public Liability Insurance can vary greatly depending on several factors. It's determined by a combination of factors, not just one or two.

Your business's industry and the nature of your service play a significant role in calculating the premium. For example, a café in a busy town that serves a high volume of customers every day may have a higher premium than an accountant's office in a quiet town.

The number of customers your business sees each day also affects the cost. This is because a business that sees a high volume of customers is more likely to be involved in an accident or incident.

Your location is another important factor in determining the premium. Businesses located in busy towns or areas with a high population density may have higher premiums than those in quieter areas.

The size of your business and the number of employees you have also impact the cost. Larger businesses with more employees may have higher premiums due to the increased risk of accidents or incidents.

Here's a quick summary of the factors that affect Public Liability Insurance premiums: