💡 Key Insight
- Public liability insurance covers your business for compensation claims if a third party suffers injury or property damage because of your business activities, helping protect your financial assets from unexpected legal costs.
- A core benefit of public liability insurance is that it pays for legal defence costs and compensation awards up to your policy limit when a customer, supplier, or member of the public is hurt or their property is damaged on your business premises or due to your operations.
- Public liability insurance does not cover employee injuries (which are covered by workers’ compensation), nor does it cover intentional harm, contractual disputes, or professional advice errors; these gaps mean many businesses also need other specific insurance types.
- Small businesses often need public liability insurance before securing leases, event permits, or supplier contracts, because it provides reassurance to partners and regulators that the business can meet costs from third-party claims.
Running a business is a momentous responsibility. Not only are you responsible for the daily operations of your business, but you may also be liable if someone is injured on your premises. For example, you might run a book store. If someone trips over a book on the floor and breaks their ankle, you would likely have to compensate them. The cost of compensation in addition to legal fees would be enough to seriously damage many small businesses. To combat this, there is public liability insurance. In this article, we’ll tell you what it covers and why it’s always a good idea.
Public liability insurance covers you against legal claims if someone suffers an injury at your business . It also covers you for property damage because of or during your business activities.
Perhaps you run a theatre company and your business is doing well. You recently had a full-house for a performance of Macbeth. One of the audience members tripped over a chair in the dark while she was bringing back popcorn. She now wishes to sue you for her injury. This is where public liability insurance comes in. It will protect you against the claim made by the injured civilian.
Public liability insurance protects you from negligence claims. The financial and legal costs of these can be hefty. Along with covering the cost of medical treatment, you will also face costs for your lawyer.
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What public liability insurance covers
Incidents (injury/death) occurring at your business
If someone is injured or a fatality occurs at your business, it can be costly. Although this is something that no business owner wants, accidents do happen. What can be even worse is dealing with the lengthy Court process, legal fees and compensation for the injured or deceased.
Any legal and court costs
Legal and Court fees can be expensive. If a third party suffers personal injury or property damage, your insurance will cover you. Otherwise, you could find yourself paying tens of thousands of dollars to resolve the matter.
Negligent advice given to a customer by your business
Although it’s important that you hire the right employees for your business and train them properly, mistakes can still be made. If an employee (or even you) give a customer negligent advice, they could have grounds to sue you. However, if you have public liability insurance, you won’t be liable.
Any loss or damage of property
Imagine that you run a busy electrical store. A customer comes in, carrying their brand new smartphone. They accidentally leave it on the shelf of the tablets they were looking at. When your customer returns a few hours later to pick it up, its been stolen.
If something like this happens, a customer may have grounds to sue you. To protect you from being held liable for the phone being stolen, there’s public liability insurance.
Any damaged caused by your products
Business owners should only sell or display products that are safe for customer use. However, sometimes a product may end up causing damage. For example, the plastic cover of an electronic you sell may be torn. This becomes a problem if a customer picks it up and it injures their hand. If this occurs, having public liability insurance will protect you.
Protection for those not named in the policy
A lot of insurance policies only cover those mentioned in the policy. An example of this is health insurance, or even CTP. However, if you had to update your policy for every new employee, you’d find yourself continually contacting your insurance provider. This is why public liability insurance covers people not named in the policy.
Nervous shock & emotional distress
Accidents can cause shock and emotional trauma. Although this can be difficult to put a price on, customers can be compensated for this. Public liability insurance will cover you for any costs which relate to the emotional distress experienced by the claimant.
Having public liability insurance means that you can be rest assured knowing an accident which happens at your business won’t mean the end of it. Beyond covering you for compensation claims and legal fees, having this insurance will also raise the confidence of your employees, in knowing that if anything goes wrong the business is covered. If you’re not sure whether you need public liability insurance, it is worth consulting with a business lawyer.
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