What Is Public And Product Liability Insurance?
Public and products liability insurance helps protect your legal liability to third parties, including clients, customers and the public for injury or property damage, caused by your business. It can even cover emotional distress or shock that your business causes another person.
It is generally considered to be one of the most important insurance policies for any business to invest in and particularly for small businesses who potentially have the most to lose by not having adequate insurance protection. If you have direct contact with the general public then this cover is going to be a necessity for your small business.
If you have ever had an embarrassing situation where:
- Someone (other than your own employees), has been injured or suffered property damage as a result of you running your business or
- equipment you are using malfunctions and causes an accident or damage to someone else’s property or
- you accidentally damage a client’s property or cause injury to a client while carrying out your job or
- a customer trips over and injures themselves in your store
...then you may have benefitted from public & products liability insurance.
It is often simply referred to as Public Liability Insurance.
What is public liability insurance?
Public liability cover is one of the most important small business insurance policies that should be considered. If an accident or unforeseeable incident causes damage or injury to someone (other than your employees), you may be found legally liable to cover the costs. Public liability insurance can help to protect your business from the financial risk of liability claims – giving you the certainty you need to trade with confidence.
What is product liability insurance?
No matter how stringent your company is, mistakes can happen. For example, you may design or sell a product that causes a customer harm. Even if you’re not at fault, you could risk serious financial damage through legal and court costs if a customer decides to sue you.
Product liability insurance is designed to help protect your business if you’re sued because a product you sell, assemble or supply has caused harm to a person or property. It can protects businesses from financial losses associated with legal claims or lawsuits filed against them due to injury or property damage caused by their products. This insurance typically covers the costs of legal fees, settlements, and judgments, and can help businesses avoid bankruptcy in the event of a successful product liability claim.
What Does Public Liability Insurance Cover?
Public Liability insurance is designed to protect your business from the financial risk of claims or allegations if a customer, supplier or member of the public is injured or suffers property damage as a result of you carrying out your business activities, including the products you sell or provide. It can even cover emotional distress or shock that your business may cause another person.
It will generally cover the costs of investigating, defending and settling claims made against your business as well as any compensation that you are found liable to pay. You can focus on carrying on your business whilst your insurer manages the entire process on your behalf. Some of the things your policy may cover you for include:
- Loss or damage to someone else's property while you are delivering your service
- Personal injury to others who may be visiting your premises
- Injuries sustained by others whilst using you product
- Loss or damage to goods that you do not own that are in your care or custody
- Somebody acting on behalf of your business when the incident occurred
- Legal costs incurred in investigating, defending or settling a claim
- Liability arising out of advertising carried out by or on behalf of the insured
Who Needs Public Liability Insurance In Australia?
While public liability insurance isn’t mandatory for most businesses, it is one of the most important business insurance policies you could invest in. In Queensland for example, it is optional for many small businesses. However, there are a number of business types where public liability insurance is mandatory.
Many contracts will require a business to have their own Public & Products Liability insurance and are often required to keep the policy renewed well past the completion of a contract.
Business owners have a legal responsibility to take reasonable steps to ensure the safety of customers, suppliers and the wider community as well as their property and avoid personal injury or property damage.
Even if you are the most careful of operators, unforeseen accidents happen all the time.
As a small business owner, if you were faced with a public or products liability claim, the financial impact could be catastrophic. Aside from the cost of legal fees or compensation payments, the chances are you would also face issues with business interruption to your business as well as damage to your reputation.
You should strongly consider public liability insurance if:
- you have visitors to your premises or
- you deliver services to clients or customers in public spaces or at their premises or
- your work involves a customer’s property or
- you manufacture or sell products or service
- you use sub-contractors or labour hire personnel in your business or
- you lease or use a business space
The offshore manufacturer of George’s sunscreen accidentally contaminates the product with chemicals that cause customers to break out in a painful rash.
They file a class suit against George to compensate them for the injury. Luckily, George’s policy covers him for the costs of going to court and the damages awarded to the customers.
Does Public Liability Insurance Cover Injury To My Employees?
Generally speaking anyone who is considered to be ‘employed’ by your business is not covered by a public liability insurance policy. Instead, if a worker is injured in the course of doing their job for your business, this would be covered by Workers Compensation Insurance. Workers Compensation insurance is one of the few mandatory policies for employers in all states and territories in Australia.
Subcontractors (including those who invoice you with their ABN) and labour hire personnel are not usually deemed to be employees and would not be included on Workers Compensation Insurance. Injuries (or allegations of injuries) to these types of workers will often be referred to the business owner by the injured parties legal counsel in the first instance. In general terms the business owner would then lodge a claim under their Public & Products Liability insurance.
At AIB we can tailor insurance packages suited specifically to your needs. As business insurance experts, we can find policies, negotiate insurance contracts and create bespoke packages, regardless of your industry.
N.B. This information is of a general nature and shouldn’t be relied upon as specific advice for your situation. It is important that you read the specific policy wording to understand details relating to cover, exclusions, terms and conditions.
OTHER Business INSURANCE OPTIONS
There are a number of other small business insurance options that it is worth business owners considering, depending on the type of business that you operate. These include:
- Income Protection Insurance
- Employment Practices Liability Insurance
- Management Liability Insurance
- Product Recall Insurance
- Directors & Officers Insurance
- Professional Indemnity Insurance
- Cyber Insurance
- Business Interruption Insurance
To ensure you have the right insurance cover for your business, talk to one of our expert business insurance brokers and get the peace of mind that you have the right insurance cover, tailored to your specific needs.