Public Liability

What kind of businesses need Public Liability insurance?

In short, public liability insurance may be necessary if your business often interacts with third parties, such as clients, suppliers, and members of the public. It can be difficult to forecast when a public liability insurance claim will arise, but if it does, the expenses to your business might be severe and could even force you out of business.

Typical business types that might purchase a public liability insurance policy include the following:

1. Trades
2. Professionals
3. Wholesalers
4. Manufacturers
5. Travel and tourism
6. Office based

What is typically included?**

Compensation for:

1. Expenses related to compensating a third party for personal injury (e.g., a client, supplier, or member of the public)
2. Compensation for reimbursement for third-party property damage resulting from your careless business activities.
3. The expenses of defence and legal representatives for a covered claim
4. Compensation for any harm to property belonging to third parties that you are in charge of, care for, or control

** Product liability is covered by many public liability policies as well.

What is typically not covered?*

Injuries to your employees
1. Damage to your own property
2. Expenses to repair defective workmanship or a product recall
3. Professional negligence
4. Contractual liability
5. Events that happen either before or after the policy period
6. Aircraft products
7. Asbestos
8. Liquidated damages
9. Gradual pollution
10. Punitive damages: in cases where the insured behaved in such a way that additional damages were granted
11. Liabilities taken on by the insured under a contract that the insurer would not be responsible for under common law

Do I need Product Liability Insurance?

Product distribution and supply businesses operating in Australia should give careful thought to purchasing product liability insurance. It is always possible for something to go wrong, even with the highest attention to safety.
A product defect can lead to costly claims for property damage or personal injury, and if you don’t have the right product liability insurance, you could find yourself in hot water. A product liability claim could have a significant impact on your personal assets if you are a sole trader, since you may be held personally liable for allegations of property damage or personal harm.

A Product Liability claim could arise from:

1. A fault in the product’s creation or production

As an example, when a power adapter’s plastic shell is not sealed tightly enough, electrical wires are exposed and can shock users.

2. A defect in the product’s design

For example, clothing made with a chemically dangerous dye can make people sick.

3. Defective warnings, instructions or labelling of the product

For example, a specialized work machine may be sold without clear usage instructions or a notice about the risks involved in improper use.