As a business owner, you may have heard of public liability before. But what does it entail exactly and – most importantly – do you need it? In this quick guide, our friends at BizCover dive into these essential questions.
What is public liability insurance?
Essentially, public liability insurance is designed to protect your business from financial losses that may arise if your business activities cause injury to a third party or damage their property. Public liability insurance can help buffer your business against the potentially significant costs of lawsuits and compensation claims – so that an accident doesn’t throw off your financial balance.
Some practical scenarios
To help you understand this powerful tool, here are some practical examples:
- Office accident: Even in a seemingly safe office environment, accidents can (and unfortunately do) happen – with potentially significant costs attached. Imagine a client visiting your office and tripping over a stray computer cable, resulting in a sprained ankle and a subsequent claim against your company.
- Property damage: If you’re a building contractor, you may accidentally cause substantial damage to a client’s property during a renovation project. And if this led to a claim against your business, public insurance could help you manage the associated costs.
- Retail mishaps: Consider a situation where a customer in your retail store slips on a recently mopped floor, with the fall resulting in a broken wrist and a pile of medical bills. Public insurance could help cover the compensation claimed by the customer.
What’s covered and what’s not?
As we mentioned, public liability insurance mainly covers legal fees and compensation costs if a third party brings a lawsuit against your business, due to injury or property damage.
On the other hand, it generally doesn’t cover injuries sustained by your own employees or financial losses due to professional mistakes. You may need other types of cover for those scenarios, like professional indemnity insurance (for losses from professional errors) or employer liability insurance (for employees’ injuries or sickness). Get in touch with the team at BizCover to learn more.
Do I need public liability insurance?
Now that you know what public liability insurance entails, the next question circling your mind might be: “Do I need it?” The answer depends on a host of factors and is unique to your business’s nature and risk profile.
Generally speaking, public liability insurance can be worth considering for any business that interacts with the public, whether clients and/or other businesses. But the potential for accidents leading to injury and property damage is present in virtually all lines of work.
To get you started, here are some key points to consider:
- Your most likely risks – Thinking about your business, what scenarios can potentially result in injury or property damage?
- Your financial vulnerability – Could your business absorb the financial impact of a large compensation claim?
- Contract requirements – Is public liability insurance a requirement on client contracts?
- Industry-specific requirements – Are you aware of specific laws and regulations requiring this type of cover?
- Reputation management - In the event of an incident, how would a claim affect your business's reputation?
According to BizCover, some professions can particularly benefit from public liability insurance – like tradies and contractors, consultants, real estate agents, fitness professionals, and beauty professionals. It all depends on the nature of your interactions with the public, and the potential for accidents to happen.
The bottom line
Every business is unique, with specific risks and insurance requirements. If you’d like to talk about public liability insurance or other types of cover – get in touch with the experts at BizCover.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.