What Is Public Liability Insurance?

Public liability insurance is a type of coverage designed to protect businesses and individuals from claims made by third parties who experience injury or property damage as a result of the business’s activities. Whether you run a shop, offer trade services, or organize events, public liability insurance acts as a financial safety net when accidents occur involving the public or clients.

While public liability insurance is not always a legal requirement in Australia, it is highly recommended for risk mitigation. Many businesses that regularly interact with the public—such as retailers, tradies (tradespeople), or event organizers—choose to take out this insurance to avoid expensive compensation claims that could threaten their operations.

What Does Public Liability Insurance Typically Cover?

• Bodily Injury to Third Parties — If a customer, supplier, or member of the public suffers injury on your business premises or as a result of your work, public liability insurance can cover medical costs, compensation, and legal expenses involved in defending these claims.
• Damage to Third-Party Property — Accidental damage is covered, such as spilling coffee on a client’s laptop or damaging someone else’s property during your work. The insurance helps pay for repairs or replacements.
• Legal Expenses and Defence Costs — Whether a claim is successful or not, your insurer may cover legal fees, court costs, and settlement payments arising from defending against a claim.
• Compensation Payments — If your business is found liable, public liability insurance pays for damages or compensation settlements awarded to the injured party.
• Incidents on Premises or Caused by Operations — Coverage can apply to incidents on your business location and accidents occurring off-site during business activities or when you’re working at a client’s premises.
• Product Liability (Often Included) — Many public liability policies also extend to injury or damage caused by products you sell or supply. In some cases, product liability requires a separate policy—confirm whether this is included.

What Is Excluded from Public Liability Insurance?

• Injuries to Employees — Employee injuries are typically covered under workers’ compensation, not public liability.
• Damage to Your Own Property or Injuries to Yourself — Public liability covers only third-party claims.
• Professional Negligence or Errors — Financial losses from incorrect advice or professional mistakes are covered under professional indemnity insurance.
• Intentional Acts and Illegal Activities — Deliberate harm or unlawful actions are excluded.
• Contractual Liabilities — Liabilities assumed purely by contract beyond those imposed by law are usually excluded.
• Pollution & Environmental Damage — Often requires specific environmental liability cover.
• Cybercrime or Data Breaches — Require separate cyber insurance.
• Faulty Workmanship — Damage caused by poor workmanship is generally excluded.
• Pre-existing Incidents — Claims from incidents before the policy start date are not covered.
• Product Liability (If Not Included) — If not bundled, arrange a separate product liability policy.

Why Is Public Liability Insurance Essential for Australian Businesses?

• Shields your business from costly compensation payouts and legal fees.
• Enhances credibility with clients, landlords, and event organizers.
• May be a contractual or regulatory requirement.
• Provides peace of mind when you regularly interact with the public or clients.

How to Choose the Right Public Liability Insurance Policy

• Assess the nature of your business activities and your exposure to third‑party risks.
• Check exactly what the policy includes and excludes, especially product liability.
• Confirm minimum coverage limits required by contracts, venues, or industry standards.
• Compare premiums, coverage limits, and wording across insurers.
• Review your policy regularly as your risk profile evolves.

Frequently Asked Questions

Do I need public liability insurance if I'm self-employed or a sole trader?

Most sole traders and self-employed individuals who interact with clients or the public benefit from having public liability insurance, as it protects against claims that could arise from everyday business activities.

Is public liability insurance legally required in Australia?

Public liability insurance is not universally mandatory, but many industries, clients, landlords, and event venues require it as a condition of doing business. It’s strongly recommended to safeguard your business finances.

What is the difference between public liability, professional indemnity, and workers’ compensation?

Public Liability Insurance: Covers injury or property damage claims made by third parties due to your business activities.
Professional Indemnity Insurance: Protects against claims of financial loss from professional advice or services provided.
Workers’ Compensation Insurance: Covers injuries and illnesses suffered by your employees during work.

How do I make a claim under my public liability insurance?

Notify your insurer as soon as possible after an incident. Provide all relevant documentation and cooperate during their investigation. Your insurer will guide you through assessment and settlement.

What does “product liability” mean, and is it included in my policy?

Product liability relates to claims caused by products you manufacture, sell, or supply that lead to injury or property damage. Some public liability policies include product liability, while others require a separate policy—check your policy wording or ask us.

For professional advice and a free quotation, please contact us.