A realistic guide on public liability insurance

Let’s be honest. Sometimes, insurance can feel like a bit of a grudge purchase. We flick through policy booklets and scan disclaimers to see what is and isn’t covered with a resigned sigh, questioning whether those far-fetched scenarios ever do happen and whether the money we pay for policies is worth it.  

Could a customer really slip and break their hip walking through my shop?

What are the chances of a visitor actually tripping over a tool at a building site?  

Surely my restaurant will never have a food poisoning incident... right?  

The truth is that scenarios we think are unlikely to occur can and do happen. And when they do, they can result in pretty serious consequences. Injury, illness and even deaths occur from mishaps caused by accidents or negligence in the workplace, so it’s important to be aware of what you can do to help protect your business. 

Tip: Keep in mind that public liability is designed to cover injuries to third parties, like customers, suppliers or subcontractors. It does not cover injuries for employees. For those situations, worker’s compensation would be required.

As you would with any insurance policy, it’s always important to refer to the relevant Product Disclosure Statement (PDS) to know exactly what you’re covered for. But in a nutshell, public liability insurance is about protecting your business in the event of a person bringing a claim against you for an injury or illness that resulted from your business’s activities. You may also hear public liability insurance be called general and products liability cover.  

Businesses – whether it’s retail shops, hospitality venues like restaurants and cafes, trade services or corporate bodies – have a duty of care to protect clients and members of the public from reasonably foreseeable injuries or illnesses that could occur as a result of their business. If a business fails in this duty of care, they can be held responsible (liable) for the damage caused, which could result in paying compensation for things like:

• pain and suffering
• loss of income and future wages
• medical expenses and treatment, both current and future
• and other losses. 

As such, if someone gets hurt or sick at your business premises or because of your business activities, they have the right to make a claim for compensation. Some examples of public liability claims include:

Slips, trips and falls  
Slipping on a puddle of water in a shop that results in an injury. 

Food poisoning 
Being hospitalised as a result of eating contaminated or expired produce served at a restaurant or cafe.  

Other accidents 
Tripping over a tool left on the ground at a worksite, or accidentally burning a client with hot wax at a beauty salon.

While there’s no blanket rule that applies to all businesses, there are some occupations and situations where public liability insurance is needed for a business to operate. For example, sometimes even having a stall at a local market will require liability insurance.  

If you’re unsure about whether you need to have public liability insurance, we suggest checking out business.gov.au’s guide on legal, operational and business requirements for different industries and having a chat with your insurer, lawyer or a business adviser for guidance.