What Does Public Liability Insurance Cover and do I Need it?

business professionals walking through insurance building

Two of the most common questions when considering public liability insurance is what does the policy cover and do you need it.

Before you take out any cover, it’s important you understand what public liability insurance covers. Risk are inevitable regardless of the industry you work in. However, the right insurance policy can help to protect you and your finances.

If you or your staff interact with people through your business, public liability insurance may be required. Here’s what you need to know before considering which insurance is right for you.

What is Public Liability Insurance?

Every business has a duty of care to the public. Third parties such as customers, suppliers and anyone else who encounters your business may be able to make a claim against you.

Public liability insurance is designed to protect you against these claims and the costly legal fees that may come with them.

Such claims can result from accidents or injuries where you may be deemed liable for unsafe activities or failure to take reasonable care.

Examples include:

  • Accidental damage to a third party’s personal property
  • Faulty product issues or work
  • Unsafe environment causing injury to a third party
  • Slips, trips and falls due to spillages and other potential hazards on business premises or public areas relating to a business event

Why do I Need it?

Although public liability insurance is not mandatory for all businesses in Australia, trades businesses and those that operate under government issued licences or regulated industry associations do have mandatory public liability requirements.

However, nearly all businesses where staff interact with customers or the public can benfit from cover.

Examples include:

  • Sole traders
  • Consultants, contractors and tradespeople who work from home or visit clients’ premises to perform work
  • Any sized business with an office, showroom, shop or public premises

For start-ups and small businesses, investing in public liability insurance may not seem like a priority. However, even the most skilled businesses and staff may experience the costly and potentially damaging results of a successful claim.

What Does Public Liability Insurance Cover?

Compensation from public liability claims covers lost income and legal expenses required to settle the claim. It also covers:

  • Medical and travel expenses, including first aid assistance at the time of the incident, rehabilitation and medication
  • Domestic assistance
  • Loss or damage of goods
  • Loss or damage to a third party’s property while performing work
  • Non-economic loss for pain and suffering
  • Loss of superannuation benefits
  • Permanent impairment

What Isn’t Covered?

Public liability insurance won’t cover every eventuality that may occur from a claim. Some examples of what isn’t covered include:

  • Injuries to employees: Public liability insurance will cover you and your staff if a third party suffers injury, but it won’t cover injuries to your employees
  • Illegal or deliberate behaviour: If damage or injury occurs because of illegal activity or deliberate actions it won’t be covered
  • Taxes and fines: If you receive penalties, taxes or fines associated with your business, they generally won’t be included in your public liability cover
  • Your property: Damage is covered for third party property but property in your control won’t be. This also includes any employee property

Additional exclusions include:

  • Liquidated damages
  • Product(s) recall
  • Asbestos
  • Aircraft products
  • Gradual pollution
  • Breach of professional duty
  • Internet operations
  • Vehicles
  • Faulty workmanship
  • Libel and slander

Are my Employees Covered?

If third party damage or injury occurs because of the work your employees have done, they will be covered under public liability insurance.

However, injuries to employees will only be covered under workers compensation insurance which is compulsory in Australia. This statuary form of insurance provides protection to all workers if they suffer a work-related injury or illness.

If you are looking to establish a solid business’ risk management policy, it’s essential to consider public liability insurance.

Author Bio

This article is written by Jayde Ferguson, who recommends Phoenix Insurance Brokers – A leading provider of insurance including worker’s compensation for businesses and risk management services. You can catch her on LinkedIn.

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