What Is Public Liability Insurance?

If someone is injured or their property is damaged because of your business activities, they may seek compensation from you. Public liability insurance is designed to help with that kind of claim.

For businesses that deal with customers, visit client sites or work in public places, it is often one of the first covers they look at. This guide explains how it generally works and what to check.

What public liability insurance covers

Public liability cover generally responds to claims made by third parties for personal injury or property damage caused by an occurrence connected with your business. Cover may include compensation you are legally liable to pay and the legal costs of defending a claim, subject to the policy terms, conditions, exclusions and limit of liability.

A third party is someone other than you and your employees. That might be a customer, a member of the public, a supplier or a client whose property you are working on.

Products liability

Public liability is often sold together with products liability. Products liability relates to injury or damage caused by goods you make, sell, supply, import or repair. If you are involved with products in any way, check whether this section is included and what it covers.

Examples of where it may respond

The following are general examples only. Whether a policy responds will depend on the facts and the wording.

• A customer slips on a wet floor in a shop and claims for their injuries
• A tradesperson accidentally damages a client's flooring while installing fittings
• A stallholder's display falls over and injures a passer-by at a market
• A product supplied by a business is alleged to have caused an injury

What it usually does not cover

Public liability is not a catch-all. Depending on the policy, common exclusions and limitations may include:

• Injury to your own employees, which is generally a matter for workers compensation
• Damage to your own property, which is a matter for property insurance
• Claims arising from professional advice, which may fall under professional indemnity
• Liability you take on under a contract beyond what you would otherwise have at law
• Damage to property in your care, custody or control, unless the policy extends to it
• Certain higher-risk activities, such as work at heights or hot work, unless declared and accepted

Wordings vary between insurers, so the exclusions in your policy may differ from this list.

Choosing a limit of liability

The limit of liability is the maximum the insurer may pay for a claim or for the period of insurance, depending on how the policy is written. Businesses often choose a limit based on their risk, the people they deal with and the contracts they sign.

Many principal contractors, councils, landlords and event organisers ask for a minimum limit and a certificate of currency before you start work. Checking those requirements early can help avoid delays on the day.

Things to check in your contracts

• Whether you need to note another party as an interested party on your policy
• Whether the contract includes an indemnity or hold harmless clause
• Whether you are asked to waive rights of recovery against another party
• The minimum limit and the type of cover required

Some contract terms can extend your liability beyond what a standard policy contemplates. A broker or lawyer can help you understand how a contract interacts with your cover.

Keeping your cover accurate

Insurers price public liability based on what you tell them about your business, such as your activities, turnover, number of workers and use of subcontractors. If your work changes, for example you start doing a new type of job, let your insurer or broker know. Activities that have not been declared may not be covered.

When you arrange or renew business insurance, you generally have a duty of disclosure. That includes past claims and incidents relevant to the insurer's decision. If you are unsure whether something matters, it is safer to mention it.

Tasman Insurance Group can help you review the activities listed on your policy and explain how the cover is likely to apply to your work.

This article is general information only and does not take into account your objectives, financial situation or needs. Before making a decision about insurance, read the relevant Product Disclosure Statement and policy wording, and speak with a licensed adviser about your circumstances.