Public liability insurance protects your small business if a customer, passer-by or supplier is injured or their property is damaged because of your work. It can pay for legal representation, court-awarded compensation, and associated costs, whether incidents happen at your premises, at a client site or out in public. For many sole traders and SMEs—from tradies to food vans and retailers—it’s the policy that stands between a minor mishap and a costly claim.
In this guide, you’ll learn what public liability typically covers and what it doesn’t, whether it’s compulsory in Australia, typical costs and what drives the price. We’ll explain $5m vs $10m vs $20m limits, how it compares to professional and product liability, when contracts require it, how claims are paid, and how to compare quotes smartly. Ready to protect your business? Let’s get into the essentials.
What public liability insurance covers for small businesses
Public liability insurance for small business helps pay when a third party (a customer, supplier or member of the public) is injured or their property is damaged because of your business activities. It can cover your legal defence, court-awarded compensation, and related costs if a claim is made against you. Whether you operate from a shopfront, work at client sites, or trade at events and markets, it’s designed to respond to accidents that arise from your day‑to‑day operations.
In practice, that means cover for unintended third‑party injury and property damage linked to your work, plus the reasonable legal and investigation costs required to resolve the claim. Typical, everyday scenarios include:
- Slip, trip and fall injuries: A customer slips on a wet floor in your café and is hurt.
- Damage to client property: A tradie accidentally cracks a client’s stone benchtop while working.
- Incidents in public spaces: A market stall marquee blows over and dents a parked car.
- On‑site hazards: A contractor’s ladder scratches a client’s window and the glass needs replacing.
What it doesn’t cover (common exclusions and limits)
Like every policy, public liability insurance for small business has boundaries. It’s built for third‑party injury and property damage, not every risk your business faces. Expect exclusions and sub‑limits that vary by insurer and occupation—always check the PDS and any contract requirements before you rely on your cover. Common gaps include:
- Injury to your employees: Workers’ compensation applies, not public liability.
- Damage to your own property: PLI addresses third‑party losses, not your gear or premises.
- Professional advice or design errors: Consider professional indemnity for advice‑related claims.
- Rectifying faulty workmanship: The cost to redo your work is typically excluded.
- Fines, penalties or intentional acts: Not covered or insurable at law.
- Road‑registered vehicles: Claims belong under your motor/CTP policy, not PLI.
- Pollution, asbestos or gradual deterioration: Commonly excluded or tightly limited by sub‑limits.
Is public liability insurance compulsory in Australia?
There’s no single Australian law that makes public liability insurance compulsory for every small business. However, it’s frequently a practical requirement: councils, venues, landlords and principal contractors often demand proof of cover (a certificate of currency) before you can trade, occupy a site, or start work. Many licences, events and tenders also stipulate minimum limits, commonly $5m–$20m.
- Council and venue permits: Markets, pop‑ups, community events.
- Commercial leases: Landlords require cover for visitors on premises.
- Construction and trades: Head contractors mandate PLI for subcontractors.
- Government and corporate tenders: Contract conditions set minimum limits.
If in doubt, check your contracts and local permit conditions before you commence work.
How much does public liability insurance cost for small business?
Budget-wise, many small businesses in Australia pay roughly the cost of a streaming subscription each month for basic cover—industry sources put the average around $39 per month. Your actual premium depends on your occupation, the work you do, where you operate, your claims history and the cover limit you choose. Most insurers offer flexible limits (commonly $5m, $10m or $20m), and—generally—the higher the limit, the higher the premium.
A low-risk retailer or home-based consultant might pay less than a contractor working with heat, height or heavy tools. Quotes also reflect how and where you interact with the public (shopfront, client sites, events), plus any contract requirements that specify minimum limits. Want a sharper number for your business? A quick quote will factor in your industry, turnover and risk profile—we’ll unpack those drivers next.
What affects the price: industry, turnover, location and risk
Insurers price public liability insurance for small business by estimating how likely you are to have a claim and how costly it could be. Two similar businesses can pay different premiums if one works at height or in crowded spaces while the other operates quietly from a studio. Expect the following levers to move your price up or down.
- Industry/occupation risk: Higher‑risk trades and activities (heat, height, heavy tools) usually cost more than low‑risk retail or consulting.
- Annual turnover: More jobs and customers often mean more interactions with the public, so exposure (and premium) can rise with turnover.
- Location and foot traffic: Busy CBD shopfronts, shared spaces and events/markets expose you to more third‑party interactions than a low‑traffic site.
- Work environment and hazards: Use of ladders, cutting tools, hot works, or onsite work at client premises increases risk.
- Claims history: Prior incidents can lead to loadings; a clean record and good safety practices can help.
- Subcontractors and labour hire: Responsibility for others’ actions can increase exposure if you’re the principal.
- Cover limit and extras: Higher limits (e.g. $10m or $20m vs $5m) and broader cover typically mean higher premiums.
Next, we’ll help you choose between $5m, $10m and $20m limits.
How to choose your cover limit: $5m, $10m or $20m?
Pick your public liability limit by asking two questions: what’s the worst‑case third‑party injury or property damage your work could cause, and what do your contracts demand? In Australia, small businesses commonly choose $5m, $10m or $20m limits. Councils, landlords and head contractors often set a minimum, and many policies bundle public and product liability together—so your chosen limit typically applies across both. If a single incident injures multiple people, costs can escalate quickly; the extra limit often costs less than you think.
- $5m: Low‑risk operators (home‑based consultants, micro retailers) with minimal foot traffic and no high‑value contract requirements.
- $10m: A practical default for many SMEs—retailers, cafés, tradies on residential jobs, market stallholders—and a common contract minimum.
- $20m: Higher‑exposure work—shopping centres, large construction sites, major events, councils/venue mandates, or crowded public spaces.
When in doubt, meet the highest requirement you face and consider stepping up for peace of mind.
Public liability vs professional indemnity vs product liability
These covers solve different problems, and many small businesses need more than one. In Australia, “general liability” is often used interchangeably with public liability, and product liability is commonly bundled with it under the same $5m, $10m or $20m limit. Professional indemnity is separate and protects advice-based work.
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Public liability: Covers third‑party injury or property damage arising from your business activities or premises (e.g. slips, trips, accidental damage at a client site). Core for most small businesses.
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Product liability: Covers injury or damage caused by products you make, sell or supply (e.g. defective item causes harm). Frequently included with public liability for small businesses.
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Professional indemnity: Covers financial loss from alleged negligent advice, design or professional services (e.g. consulting or design errors). Essential for consultants, designers and advice-led trades.
If you sell goods and give advice, pair public/product liability with professional indemnity for full protection.
Who needs public liability insurance and when it’s required
If people can trip over your tools, touch your products or walk through your space, you likely need public liability insurance for small business. It’s relevant any time you deal with the public in person, enter client premises, sell or install products, attend events, or lease commercial space. Often it’s a contractual must‑have before you can start work or open the doors.
- Retail and hospitality: Shops, cafés, food vans and kiosks with customer foot traffic.
- Trades and contractors: Builders, sparkies, plumbers and cleaners working at client sites.
- Markets and events: Stallholders, exhibitors and pop‑ups needing council/venue approval.
- Mobile and home‑based operators: If clients visit you or you visit them.
- Tenants and licensees: Commercial leases and centre management typically require it.
- Suppliers and subcontractors: Head contractors, schools and councils often mandate cover.
Certificates of currency and contract requirements
A certificate of currency is your proof that you hold current public liability insurance for small business. Councils, landlords and head contractors often require it before permits, leases or site access. It states who’s insured, the policy period and your cover limit. Make sure the legal name matches your contract and keep the certificate current—many counterparties want a fresh copy at renewal.
- Match the limit: Confirm the required $5m, $10m or $20m is shown.
- Name the principal: Add the landlord/head contractor as an interested party or with principal indemnity if requested.
- Include products: Show product liability if you make, sell or supply goods.
- Check territory/jurisdiction: Ensure it covers where you operate (often Australia-wide).
- Note special clauses: Add any required waivers or cross-liability wording.
Request the certificate and any endorsements from your insurer or broker, and reissue it if limits or details change.
Real-world claim scenarios and how payouts work
When something goes wrong, public liability insurance for small business is designed to step in fast: the insurer investigates, appoints lawyers if needed, and negotiates settlement or defends you. Payouts typically cover compensation to the third party plus your reasonable legal and investigation costs, up to your selected limit ($5m, $10m or $20m), and less any excess. Limits and sub‑limits in your PDS apply per claim and across the policy period, and costs can escalate if multiple people are injured in a single incident.
- Café slip and fall: A customer is injured on a wet floor. The insurer handles liability enquiries, funds defence and agrees a settlement if you’re found negligent—subject to your limit and excess.
- Tradie damages property: A benchtop is cracked during installation. The policy responds to pay for repair or replacement and associated legal costs if a claim is made.
- Market stall hits a car: Wind sends your marquee into a parked vehicle. The insurer pays the third party’s repair costs and manages negotiations.
- Product causes injury (if included): A product you sell allegedly causes harm. The combined public/product liability responds to compensation and defence costs within your chosen limit.
How to compare policies and quotes (and what to look for)
Line up quotes side‑by‑side and check more than just the price. The right public liability insurance for small business should match how and where you operate, meet any contract minimums, and respond cleanly if a claim lands. Use consistent details (occupation, turnover, locations, limit) across quotes to keep the comparison fair.
- Cover scope: Confirm it includes public liability and, if you make/sell goods, product liability under the same limit.
- Limits offered: Are $5m, $10m and $20m options available to meet council/landlord or head‑contractor requirements?
- Legal costs and excess: Check that defence/investigation costs are covered and note the per‑claim excess.
- Exclusions and sub‑limits: Watch for hot works/height restrictions, faulty workmanship, pollution/asbestos and motor/employee injury exclusions.
- Territory/jurisdiction: Ensure Australia‑wide cover aligns with where you trade.
- Contract clauses: Availability of principal indemnity/interested party notes and quick certificates of currency.
- Claims support: Look for clear lodgement, timeframes and dedicated assistance.
Practical ways to reduce premiums without cutting cover
You don’t need to gut your protection to keep public liability insurance for small business affordable. Insurers price risk: show them you manage it well and you’re easier (and cheaper) to insure. Focus on controls that prevent claims, tidy up your disclosures, and compare like‑for‑like quotes so you’re paying a fair price for the cover you actually need.
- Lift your excess (sensibly): A higher excess can lower premiums while keeping the same $5m, $10m or $20m limit.
- Tighten risk controls: Spill kits, mats, cord covers, tool tie‑offs, signage and documented safety checks reduce incidents.
- Train your team: Inductions and refresher safety training cut human‑error claims.
- Use written procedures: SWMS/JSAs, incident logs and maintenance records demonstrate control to underwriters.
- Vet subcontractors: Require their own PLI and certificates; keep copies.
- Right‑size disclosures: Accurately state turnover, locations and activities; remove outdated or rare high‑risk tasks.
- Compare consistently: Get multiple quotes using identical details and limits to see true value.
- Review annually: As operations change, recheck limits, excess and any exclusions to avoid paying for mismatches.
How the claims process works, step by step
When an incident happens, the goal is to keep people safe, capture the facts, and get your insurer engaged quickly. Public liability insurance for small business is built to handle investigation, legal defence and settlement, but your early actions matter—especially not admitting fault and providing clear evidence.
- Make the area safe: Arrange first aid, call emergency services if needed, prevent further harm.
- Record the details: Take photos, note time/location, collect witness names and any letters of demand.
- Notify your insurer/broker promptly: Early notice is often required by the PDS; share your policy number and a short summary.
- Lodge the claim with evidence: Provide incident reports, correspondence, contracts/permits and any invoices/quotes for damage.
- Don’t admit liability: Avoid promises or offers to pay—refer all enquiries to your insurer’s claims team.
- Co‑operate with assessment and defence: Insurers may appoint assessors/lawyers, negotiate settlement or defend you; you’ll pay any excess once liability is confirmed and they’ll cover compensation and reasonable legal costs up to your selected limit.
Keep copies of everything and update your safety procedures to reduce the chance of a repeat.
What you’ll need to get a quote online in minutes
You can usually get a public liability insurance for small business quote in minutes if you’ve got the basics handy. Accurate info prevents requotes and speeds up your certificate of currency once you buy, especially when councils, landlords or head contractors need proof fast.
- Business legal name and ABN.
- Your occupation and activities: premises, client sites, events.
- Locations operated: state(s), high-traffic sites or centres.
- Annual turnover and team size: staff and subcontractors.
- Claims history: incidents or losses in the past five years.
- Cover details: preferred limit ($5m, $10m or $20m) and start date.
- Contract needs: any required clauses or interested parties.
Protecting your business beyond liability (bundles and add-ons)
Public liability insurance for small business is one pillar. To protect your assets and income, many owners bundle liability with complementary covers in a single business policy, and align it with their commercial motor if vehicles are central to operations. The aim is fewer gaps, cleaner contracts and one claims pathway when things go wrong.
- Property and contents: Protects your building, fit‑out, stock and glass against insured events like fire, storm and theft.
- Business interruption: Replaces lost income after insured property damage while you get back on your feet.
- Portable tools/equipment (general property): Covers gear that travels with you against theft and accidental damage.
- Professional indemnity: For advice, design or consulting exposures that liability won’t cover.
- Cyber liability: Helps with privacy breaches, ransomware and data restoration costs.
- Marine transit: Covers goods you send or carry between locations.
- Commercial motor and fleets: Integrate vehicles, rideshare, courier or taxi covers with your public liability to avoid overlaps.
Bundle what you actually need, match limits to contracts, and watch for double‑ups between policies.
Key takeaways
Public liability insurance is the everyday protection most small businesses rely on for third‑party injury and property damage. You’ve seen what it covers, common exclusions, typical limits ($5m, $10m, $20m), price drivers, how claims run, and smart ways to compare policies and trim premiums without cutting cover.
- Pick the right limit: Base it on worst‑case exposure and contract minima; $10m is a common default.
- Know the price drivers: Occupation, turnover, location, claims history and selected limit matter most.
- Keep proof handy: Certificates of currency unlock permits, leases and site access.
- Bundle smartly: Product liability is often included; add professional indemnity for advice/design work.
- Manage risk, save money: Better controls, accurate disclosures and a sensible excess keep premiums sharp.
Ready to sort your cover? Get a fast, fair quote with National Cover.
