Why do you need public liability insurance?
The laws in Australia hold us each responsible if we cause others loss, injury or damage. This is described as your legal liability.
Accidents happen and by definition, accidents are unplanned, unintended and unexpected.
Being held responsible can be very costly, not just in payments to the people you have injured but also the legal costs involved to defend yourself.
Even with the best precautions and intentions, accidents can happen. How would your business cope if a liability claim was made against you?
Public & Products Liability Explained Simply
Public & Products Liability protects against your legal liability to customers, clients and members of the public, i.e. third parties (not employees) for:-
- Bodily injury, and
- Property damage
arising out of the business’ activities and products.
In addition to the damages awarded, the policy covers the legal costs of investigating and defending a claim made against you, your staff and/or your business – these costs often match or exceed the damages payable.
Even if you are innocent and found not negligent, in the process you will have encountered significant legal costs. It is important to understand the cover will protect you against both actual negligence and allegations of negligence – even if the allegations are unproven.
Examples of claims
- A person slips on a wet floor in a real estate agency and breaks their leg in the fall
- A member of the public walks past a construction site and is hit by a falling piece of metal, causing injury
- A participant in a yoga class trips on a loose floorboard in the yoga studio and injures themselves
- A pipe bursts in an engineer’s office damaging a visiting client’s laptop and laptop bag
- Contaminated smoked salmon causes a salmonella outbreak
- An inflatable yoga (balancing) ball explodes during a workout, causing injury
- A company provides a wax coating to protect fruit during shipping, but the coating doesn’t work properly, causing the fruit to be damaged
- A bicycle tyre isn’t manufactured properly and blows out while a child is riding the bike, causing injury
How much cover do I need?
The answer depends on your business activities and the products you sell.
It suprises many to hear that Australia is second only to the United States in the size of the court awards for personal injury. Currently in Australia the hightest claim for injuring one person is $19,000,000 (just under 50% of this was for legal costs).
Our best advice is to buy as much cover as your business can afford, bearing in mind that any shortfall between the amount of insurance and the cost of a claim may exposure both the company’s and your own personal assets.
Buying Liability Insurance
Public & Products liability insurance is a specialist product and should be arranged through an insurance broker with expertise in this area.
You and your broker should discuss:
- The level of insurance cover you require. This will depend on the type of business you run.
- Options for choosing an excess.
- The entities and people that should be insured under the policy. The policy should cover both your business and your employees.
- The most appropriate basis of insurance e.g. within a business package solution (appropriate for office risks and white collar small businesses); a separate broadform liability policy, or within a packaged policy alongside professional indemnity.
5 top tips for taking out Public Liability Insurance:
- Find an insurance broker you can trust and who understands your business needs.
- Talk to your broker about any specific cover your business requires so they can have the insurer tailor the policy to your needs.
- Get your broker to explain the policy details (also known as the ‘policy wording’), especially the exclusions (ie what is not covered) and endorsements (ie any amendments to the standard wording).
- Make sure your broker explains what you need to do if an allegation of negligence or an actual negligence claim is made against you.
Is Professional Indemnity insurance the same a Public Liability Insurance?
The answer is no. Professional Indemnity insurance covers your legal liability arising out of the professional advice or services you provide to your customers. If you are not providing professional advice you do not require this cover.
Examples of businesses carrying out professional advice are:-
Heath Care providers
Auditors and Accountants
Real Estate Agents
Aged Care providers
Information Technology Companies
For example, a client slipping and falling in a doctors surgery would be a public liability claim. But if they are injured because the doctor failed to diagnose their illness correctly, then that would be a professional indemnity claim.
As your insurance broker, we can help to mitigate your risks and minimise what can be a significant financial impact on your business should the unexpected happen. If you would like to know more or discuss this further, please contact one of our experts and we look forward to assisting you.