Public liability insurance basics explained
What is public liability insurance?
Public liability insurance protects you and your business in the event that you are found liable for causing loss, injury and/or damage to a third party (ie the public).
Who needs public liability insurance?
It is not compulsory, nor is it required by law, however all business owners should have public liability insurance. If an incident occurs at your business, you may be liable for legal and medical expenses, compensation payments and ongoing disability outgoings to the third party.
It makes better business sense to budget for insurance than the unpredictable costs arising out of a negligence action.
Where do you get it?
Most of the large insurance companies have public liability insurance packages available for most businesses in nearly every type of industry. Some may require you to hold other insurance policies with them (which may benefit your business if you are able to obtain discounted premiums) whilst others are prepared to offer stand-alone policies.
It may also be worth contacting business advocates such as your local chamber of commerce or representative groups within your industry, as they may have relationships with insurance companies. This will not only take away some of the legwork in negotiating and obtaining a policy, but can mean discounted premiums.
How much public liability cover do you need?
How much coverage you need will be dependent on the type of business you are operating and the associated risks.
Two general rules of thumb with coverage and associated costs are:
- the larger your operation, and the more staff you employ, the larger the coverage required; and
- premiums will range from 0.5% to 1.5% of your total coverage.
Coverage is negotiated with individual insurers.
What sort of things does public liability insurance cover?
Any public liability insurance policy should cover all legal and medical costs (for you and the third party), as well as compensation payments and any ongoing disability payments to the injured.
You should note that most policies will include clauses that nullify coverage in the instance that you have been deliberately negligent and have deliberately failed to exercise caution with regards to your operation. Hence, it’s in your best interests to always ensure that your business is safe and complies with all relevant state and federal regulations.