Three Myths About Public Liability Insurance In Australia
Public liability insurance is one of the most important types of insurance for businesses and organisations because it protects them from financial losses arising from claims made by third parties (i.e. customers). Public liability insurance is required for a wide range of professions, including lawyers and accountants, electricians, plumbers and even tradesmen.
Here are three myths about public liability insurance:
1. Public Liability Insurance Is Only For Large Businesses
Public liability risks and lawsuits can impact businesses of any size. While larger operations may face higher exposure due to lots of customers, clients and public contact, small businesses are often less equipped to absorb the costs of claims and litigation without insurance. Beyond company size, the nature of your activities and interactions with the public determine how vulnerable you are to liability issues. Even micro-businesses and freelancers in Australia can benefit from tailored public liability insurance policies based on their unique needs and risks. For example:
- A sole yoga instructor renting studio space needs coverage for their classes in case a student is injured practising a pose.
- A small landscaping crew requires coverage for potential property damage caused during tree removal, lawn mowing, and garden bed installation at client sites.
- A boutique retail shop wants protection in the event a customer trips, falls or is otherwise injured on their premises.
2. If You Have Workers' Compensation Insurance, You Don't Need Public Liability Insurance
Workers' compensation and public liability insurance are two separate types of policies that protect against very different liability scenarios. While workers' comp covers employees' work-related injuries, public liability insurance protects your business against claims from clients, customers and other members of the public outside your employee ranks who experience loss or injury as a result of contact with your operations. Workers' compensation may mitigate costs from accidents impacting your staff but it does nothing to guard against situations like:
- Defective equipment installation or advice provided by your business leading to damage, loss or injury for a member of the public, who then pursues legal action.
- Unguarded renovation work carried out at your commercial premises injuring a passerby, who files a public liability claim.
3. Public Liability Insurance Is Too Expensive
While premiums for some high-risk industries can be more substantial, for most mainstream small businesses public liability insurance is very cost-effective, especially considering the potential costs of legal claims and damages without it. Some tips for keeping premiums affordable include:
- Shop around at different insurers for competitive quotes.
- Choose standard rather than excessive coverage limits based on your needs.
- Inquire about bundling multiple policies together like public liability, professional indemnity and property.
Talk with your local insurance agency about how to save on your public liability insurance premiums.