How does Public Liability Insurance work?

When a business or individual purchases public liability insurance, they are essentially transferring the risk of liability for any damages that may occur to their insurance provider. If a third party is injured or their property is damaged as a result of the actions of the insured party, the third party can make a claim against the insurance policy to seek compensation for their losses.

The insurance provider will investigate the claim and, if it is found to be negligent, will provide compensation to the injured party up to the limit of the policy. The insured party may be responsible for paying a deductible or excess amount before the insurance coverage kicks in.

Is public liability insurance a legal requirement?

In Australia, public liability insurance is not a legal requirement for all businesses, but it may be required for certain industries and professions. For example, builders and tradespeople are often required to have public liability insurance in order to obtain a license.

It’s important to note that even if public liability insurance is not a legal requirement in your industry, it can still be a good idea to have this type of insurance in place to protect yourself and your business against potential legal claims.

How much public liability insurance do I need?

The amount of public liability insurance you need depends on a number of factors, including the type of business you operate, the nature of your business activities, and the level of risk associated with those activities. Here are some things to consider when determining how much public liability insurance you need:

Industry standards: Some industries have specific requirements for public liability insurance coverage, so it’s important to research the requirements for your particular industry.

Potential risks: Consider the potential risks associated with your business activities. For example, if you operate a construction business, the risk of property damage or bodily injury may be higher than for a business that provides consulting services.

Contractual obligations: If you work with clients or partners who require a minimum level of public liability insurance coverage, you will need to ensure that your policy meets those requirements.

Keep in mind that the amount of public liability insurance you need will depend on your specific business circumstances. It’s a good idea to consult with an insurance professional to help you determine the appropriate amount of coverage for your business.

What happens if I don’t have public liability insurance?

If you don’t have public liability insurance and you are held liable for injury or property damage caused to a third party as a result of your business activities, you may be personally responsible for paying the costs of legal fees, compensation, and other expenses associated with the claim. This could potentially be a significant financial burden and could even result in bankruptcy or other serious financial consequences.

In addition, many businesses and individuals require proof of public liability insurance before entering into contracts or conducting business with others. If you don’t have public liability insurance, you may lose out on business opportunities or be unable to meet the requirements of certain contracts or agreements.

Does public liability insurance cover employees?

Public liability insurance typically does not cover claims made by employees against their employer. Instead, employers are generally required to have workers’ compensation insurance to cover work-related injuries and illnesses for their employees.

However, public liability insurance may provide coverage for claims made by third parties, such as customers or suppliers, who are injured or suffer property damage as a result of the actions of an employee. For example, if an employee of a construction company accidentally drops a tool and it falls on a passerby, resulting in injury, the passerby may make a claim against the construction company’s public liability insurance.

It’s important to note that the exact coverage provided by a public liability insurance policy can vary depending on the insurer and the specific terms of the policy. Therefore, it’s important to carefully review the policy and understand what is and is not covered before purchasing a policy.

The insurance experts at ARMA Hunter Valley will tailor a Public Liability insurance program to suit your risks and exposures and associated liability needs. We have dedicated insurers that specialise in this area.

Contact ARMA Insurance Brokers Hunter Valley today to discuss your insurance needs.

Email:maitland@armainsurance.com.au

Phone: 02 4932 4444