Do I need public liability insurance?

Day-to-day business operations bring all kinds of risks to third parties. From transporting raw materials to serving customers, an accident can occur at any time. And as a business owner, you will be the one to face its financial consequences. But you might be wondering: do I need public liability insurance?

Businesses may be liable for any third-party injury or property damage that occurs on or away from their premises or as a result of their activities. The good news? Having public liability insurance in place can help to safeguard your business from unforeseen claims and associated expenses.

If you’re a business owner, property owner, sole trader or contractor, this cover can be extremely important. Advice should be sought on the level of cover and which insurer would be best suited to your business and its activities.

Below, we explain what public liability insurance is, and the factors that determine whether you need to take out such a policy.

What is public liability insurance?

Also known as general liability, broad-form liability, legal liability and product liability insurance, public liability insurance provides cover against third-party claims of personal injury or property damage due to your business operations or offerings.

These claims can be filed by any member of the public, from customers and competitors to suppliers and passersby.

If a third party is hurt or their property damaged in an unexpected accident involving your services, products, workers or assets, then public liability insurance can help your business to pay for costs such as:

• Legal liability for personal injury or death of a third party;
• Loss or damage to third-party property;
• Legal fees for defending a covered claim; and
• Compensation payable under a covered claim.

Therefore, it can make all the difference to your business’s cash flow and continuity in the unfortunate event of third-party claims.

Keep reading to learn more about why public liability insurance is so important for certain businesses.

Why do I need public liability insurance?

As a business owner, you have a duty to care for the safety of your workers, customers and other members of the public.

What’s more, any accident involving a third party and your business – whether on the factory floor, in the office or outside the shopfront – can lead to a costly public liability claim.

Without the right cover, such an event could require your business to fork out thousands of dollars in litigation and compensation and in the worst case, if the wrong cover or cover is not taken then personal assets would certainly be at risk of being lost in a legal battle.

Not to mention the potential blemish on your brand.

Ask yourself whether your business would be able to withstand the financial and reputational harm that may come with a public liability claim.

If the answer is no, then this cover is critical.

Is public liability insurance required by law in Australia?

No. For most businesses in Australia, public liability insurance is not a legal requirement. That said, it is strongly advised across all industries as the cost of dealing with a third-party claim could have devastating consequences if things went wrong.

Additionally, there are some circumstances where public liability insurance is necessary. It is often the case that when offering your services to a third party, they would generally request that public liability insurance is in place for such work that may be undertaken – or even before you set foot on site.

Firstly, it is mandatory for certain trades that operate under a state-issued licence, like plumbers, electricians and builders.

Moreover, you may need public liability insurance to enter third-party premises under a government or private client contract.

For example, federal and state government departments, local governments and facilities such as hospitals almost always demand proof of public liability insurance before any work begins.

Do I need public liability insurance if I run my business from home?

Yes, depending on the circumstances. In some cases, it makes sense to take out public liability insurance if you run your business from home.

More specifically, this cover is recommended if customers, partners or suppliers ever visit your home office, regardless of how often.

That’s because the risk of a third party hurting themselves or damaging their property in your workplace can be serious (even if it’s also your residence).

Plus, many public liability policies are designed to cover incidents that take place in various home-based businesses, from financial consultancies to physiotherapies.

Do landlords need public liability insurance?

Yes. If you are a landlord, you should consider taking out public liability insurance for peace of mind. After all, it is your responsibility to ensure the rental property is safe for tenants, personnel and any other members of the public who step foot on its plot.

And this public liability exposure tends to commence at the first viewing.

Fortunately, public liability insurance will cover you against claims made by third parties for personal injuries or property damage on your rental property if you may be proven to have been negligent resulting or contributing to the incident occurring.

What happens if I don’t have public liability insurance?

If you don’t have public liability insurance and a member of the public makes a claim against your business for personal injury or property damage, the financial impact could bring an end to your business and possible claims may be made against personal assets, including a family home

Therefore, you should consider public liability insurance if your business interacts directly or indirectly with members of the public in situations where there is any risk of personal injury or property damage occurring.

For example, this type of policy is often recommended for professionals such as (but not limited to):

• Tradespeople;
• Restaurant and cafe owners;
• Retailers;
• Transport providers; and
• Healthcare specialists.

Find the right public liability insurance policy with Ian Jones

With public liability insurance, you can protect your business from the expense of unexpected third-party claims of personal injury or property damage.

However, determining whether or not to invest in public liability insurance can be challenging from the perspective of what cover you need and which insurer may be best suited to your line of work, as the answer rests on myriad factors. The easiest way to confirm whether you require this type of policy is to speak with an experienced insurance broker about your unique business.

Not sure where to start with public liability insurance? Receive a no-obligation quote with Ian Jones. Over 35 years strong, we take pride in being Newcastle’s most trusted insurance brokers.