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Public liability insurance covers your business if someone dies, is injured or has their property damaged because of your negligence while you are running your business. It pays the compensation you are legally liable for and the cost of defending the claim, up to a limit you choose, often $10 million or $20 million. It covers customers, clients, suppliers and members of the public, but not your own employees, who are covered by workers compensation.
Most businesses aren't required by law to hold it, although some states require it for certain occupations. In practice it is often compulsory anyway: councils make it a condition of permits, head contractors write it into subcontracts, and landlords put it in leases. This page explains what it pays for, what it doesn't, how to choose a limit, what sets the premium and how to compare quotes.
By Better Rate Mate Editorial Team · Last reviewed
The cover responds to claims by third parties, meaning anyone other than you and your employees, for injury or property damage that happens in connection with your business. Typical claims:
Most of the gaps are covered by a different policy. Knowing which is which is the fastest way to work out what else your business needs.
The two that catch people most often: injuries to your own staff belong to workers compensation, which is compulsory once you employ anyone, and a client's financial loss from your advice belongs to professional indemnity insurance. Injury caused by goods you sold after they leave you is product liability, often bundled in, and a data breach is a job for cyber insurance.
| Not covered by public liability | Where to look instead |
|---|---|
| Injury to your own employees | Workers compensation, compulsory once you employ people |
| Injury to you, the business owner | Personal accident and illness or income protection |
| Financial loss from your advice, design or professional service | Professional indemnity |
| Injury or damage caused by a product after it leaves you | Products liability, usually bundled as public and products liability |
| Damage to your own premises, stock, tools or equipment | Business property, contents or tools cover |
| Injury caused by a registered vehicle | CTP insurance, which comes with registration |
| Damage your vehicle causes to other people's property | Commercial motor insurance |
| Your own faulty workmanship (the cost of redoing it) | Generally uninsured; check for limited extensions |
| Claims arising from a cyber incident or data breach | Cyber insurance |
| Fines and penalties, and deliberate acts | Not insurable |
The figure is the limit of liability: the most the insurer will pay for claims arising from any one occurrence. It isn't the price, and it isn't a payout you receive. If a customer's injury claim settles for $400,000, the insurer pays the $400,000 (less any excess) whether your limit is $5 million or $20 million. The limit only matters when a claim is catastrophic, which is exactly when it matters most.
For public liability the limit usually applies per occurrence, so a second, unrelated claim in the same year gets the full limit again. If your policy also includes products liability, that part is commonly subject to an annual aggregate, which is the most the insurer will pay for all products claims in the period combined. Check how the policy treats defence costs, too: some pay them in addition to the limit and others inside it.
How much you need is usually decided for you. Contracts, permits and leases name a minimum. The City of Melbourne, for example, requires public liability of at least $20 million for a single claim when you hold a permit for an activity in its public spaces. Where nobody sets a figure, weigh the worst realistic injury your work could cause. Serious injury claims can run to millions, and anything above your limit is yours to pay.
Even where no law requires it, the people you work with often will. The requirement usually comes with a minimum limit and a request for proof.
| Who | When | What they usually want to see |
|---|---|---|
| Local councils | Permits for markets, footpath trading, events and other activities on council land | A certificate of currency at the council's minimum limit (City of Melbourne: at least $20 million for a single claim) |
| Head contractors and builders | Before a subcontractor starts on site | A certificate of currency at the limit in the subcontract, sometimes the principal noted as an interested party |
| Landlords and shopping centres | In a commercial or retail lease | Cover at the lease's minimum limit, often with the landlord noted on the policy |
| Event organisers and venues | Stallholders, performers, hirers and exhibitors | A certificate of currency for the event dates |
| Government agencies and larger clients | Supplier panels and contracts | Minimum limits written into the contract |
| State licensing schemes | Certain licensed occupations in some states | Evidence of cover as a licence condition |
A certificate of currency is a one-page document from your insurer confirming your policy is in force, the limit and the period of cover. Most insurers let you download one straight after you buy. Councils, head contractors and landlords ask for it, and many ask again when it expires.
Some contracts go further. Being asked to note the principal as an interested party means the insurer records their interest in the policy. A principal's indemnity extension goes further still: it lets your policy respond to a claim made against the principal arising from your work. If a contract calls for either, ask your insurer before you sign, because not every policy offers them.
There is no single price, because insurers rate each business on the risk of a claim and its likely size. The factors that move the premium most are:
It depends on the same factors, so the honest answer is a method rather than a number. Get quotes for your exact occupation and turnover at both $10 million and $20 million, with the same excess and the same extensions, from several insurers. The difference between the two prices is what the extra $10 million of protection costs your business.
The extra $10 million only comes into play for a claim larger than $10 million, so don't assume the premium doubles with the limit; let the quotes show you. If a contract or permit requires $20 million, compare quotes at that level rather than buying less and hoping it's accepted.
A cheaper quote is only cheaper if the cover matches. Hold these details constant across every quote:
| Detail | What to check |
|---|---|
| Occupation description | It matches everything you actually do, including any secondary work |
| Limit of liability | The same limit on every quote, at least what your contracts require |
| Products liability | Included or not on every quote, and whether it is aggregate |
| Excess | The same excess; property damage excesses are often higher than injury excesses |
| Key exclusions | Heights, depths, hot work, asbestos and property in your care, custody or control |
| Territory | Australia only, or wider if you work overseas |
| Extensions | Principal's indemnity, interested parties and cover for subcontractors if you need them |
It covers your legal liability if someone other than your employees dies, is injured, or has their property damaged because of your negligence in running your business, including the cost of defending the claim.
Not for most businesses. business.gov.au notes that some states and territories require it for certain occupations, and councils, head contractors, landlords and event organisers often make it a condition of permits, contracts and leases.
There's no single price. It depends on your occupation, turnover, staff, claims history and excess. Get quotes at both $10 million and $20 million with everything else identical; the difference is what the extra cover costs your business. The premium doesn't simply double with the limit.
Insurers price it on your occupation and activities, turnover, the limit, whether products liability is included, staff numbers, where you work, your claims history and the excess. Higher-risk trades pay more than office-based work. Compare quotes with identical details.
Business public liability policies are designed for people carrying on a business, and most insurers ask for your ABN when you apply. If you're running a one-off event or a hobby activity without an ABN, ask the insurer or event organiser about event or personal liability cover instead.
Injury to your own employees, injury to you, financial loss from professional advice, damage to your own property and tools, vehicle-related injury and damage, the cost of redoing faulty work, and fines. Products liability may be excluded unless it's included in the policy.
No. Injuries to your employees are covered by workers compensation, which is compulsory once you employ people.
The ATO lists public risk insurance among the premiums a business can generally claim as an operating expense. Check your own situation with your accountant.
This page explains how public liability insurance generally works in Australia. It is not advice about your business or any particular policy. Read the Product Disclosure Statement and Target Market Determination before you buy.
