Public liability insurance protects sole traders if a customer, supplier or member of the public claims your work caused injury or property damage. When accidents happen on a job, at your premises or off‑site, it can cover legal defence and compensation, helping ensure one claim doesn’t threaten your personal finances.
In this guide you’ll learn what it covers (and doesn’t), whether you need it, and when it’s required by licences, contracts or leases. We’ll compare it with professional indemnity and product liability, choose limits ($5m, $10m or $20m), outline typical costs, ways to save, how claims work, plus tips for reading the PDS, picking add‑ons and buying through National Cover.
What public liability insurance covers (and what it doesn’t)
Public liability insurance covers the costs of defending and settling claims if your negligent business activities cause injury or property damage to someone outside your business. It applies at your premises, on client sites and in public, and can include covered legal costs and any compensation payable.
- Third‑party injury: e.g. a customer slips and is hurt.
- Third‑party property damage: accidental damage while you’re working.
- Legal defence costs: solicitors, investigation and settlements.
What it typically doesn’t cover:
- Injury to you or employees: consider workers’ comp or income protection.
- Your own property: tools, stock, vehicles and business contents.
- Professional advice errors: that’s professional indemnity.
- Cyber incidents: consider dedicated cyber liability cover.
Always check the PDS for inclusions, exclusions, limits and excesses.
Do sole traders need public liability insurance in Australia?
There’s no blanket law requiring public liability for sole traders in Australia, but it’s strongly recommended if your work brings you into contact with clients, suppliers or the public, or you work on third‑party sites. One mishap can trigger costly injury or property‑damage claims. Even low‑risk, home‑based operators can face exposure (deliveries, client visits, off‑site meetings), and many find it’s effectively required by licences, contracts or leases—so assess your day‑to‑day risks and obligations before deciding.
When it’s mandatory: licences, contracts and leases
For many sole traders, public liability becomes non‑negotiable when it’s written into licences, contracts or leases. In some industries, holding current PL is a legal condition of licensing (e.g. plumbers in Victoria need a warranty; Queensland electricians need consumer‑protection). Principal or employment contracts often stipulate PL and specify limits such as $5m, $10m or $20m with proof of currency. Landlords commonly require PL noted for the premises. Some policies also require your subcontractors to hold equivalent PL.
Who needs it most: common sole trader roles and scenarios
Sole traders who interact with the public, work on client sites or have customers on their premises face the highest risk. If your activities cause accidental injury or damage, you could be liable for legal costs and compensation—making public liability for sole traders a priority.
- Tradies on site: property damage or injury.
- Retailers/cafés: customer slips or trips.
- Personal trainers and dog walkers: injuries during sessions.
Public liability vs professional indemnity vs product liability
It’s easy to mix up these covers, but they protect different risks. Use this quick rule: think about what caused the loss — your on‑site activities, your advice, or a product you supplied. That helps you choose the right mix of public liability for sole traders without leaving costly gaps.
- Public liability: Third‑party injury or property damage from your negligent business activities at your premises, on client sites or in public.
- Professional indemnity: Financial loss claims arising from your professional advice or services (actual or alleged negligence), plus covered legal costs.
- Product liability: Injury or property damage caused by products you make, sell or supply; often bundled with public liability in one policy.
Choosing your cover limit: $5m, $10m or $20m?
Start with what your licences, contracts or leases demand, then match the limit to your real‑world exposure. In Australia, $5m is a common baseline, but many principals (including shopping centres and government) stipulate $10m or $20m. Remember, the chosen limit applies to any job you undertake, not just one site.
- Contract/licence/lease requirements: Minimums often set at $10m–$20m.
- Public exposure: More foot traffic or public interaction = higher limit.
- Job size/clients: Larger projects and councils typically want $20m.
- Budget vs risk tolerance: Higher limits cost more but cap worst‑case payouts.
What it costs: pricing factors and typical ranges
Premiums for public liability insurance vary widely for sole traders. Insurers price your risk based on what you do, where you do it and how big the potential losses are. Expect pricing to move with your chosen limit (most start at $5m; $10m–$20m costs more), claims history, turnover and sites you work at. Premiums also include GST plus state stamp duties and levies.
- Industry and activities risk: construction vs home‑based consulting.
- Premises exposure: foot traffic and public on site.
- Policy structure: bundling, add‑ons and the excess you choose.
Ways to lower your premium without weakening cover
You can trim the cost of public liability for sole traders without cutting protection by tightening risk and buying smart. Compare like‑for‑like terms—limit, excess and add‑ons—before judging price.
- Right limit: Meet licence/contract minimums; don’t over‑insure.
- Higher excess: Pay less if you can wear small losses.
- Accurate occupation/turnover: Prevent risk mis‑rating.
- Subcontractors’ PL: Require equal cover and keep proof of currency.
- Document risk controls: Inductions, housekeeping and electrical testing.
How claims work: step-by-step if there’s an incident
When something goes wrong, quick, calm action protects people first and then your position. Public liability claims can escalate fast, so document everything and contact your insurer promptly. Don’t admit fault on the spot — liability is assessed later — and follow your policy conditions to avoid jeopardising cover.
- Make safe: Prevent further injury or damage.
- Record details: Photos, CCTV, witness names and contact info.
- Capture facts: Date, time, location, what happened, parties involved.
- Notify insurer fast: Report the incident and follow their instructions.
- Don’t admit liability: Avoid promises or offers to pay.
- Forward demands: Send any letters of demand or legal notices immediately.
- Co‑operate with assessors: Provide documents and statements promptly.
- Mitigate loss: Take reasonable steps to limit further damage.
Working from home, on-site or mobile: location matters
Where you work changes your exposure and your obligations. Public liability for sole traders typically responds at your premises, on client sites and in public places. If you lease premises, landlords often require current PL and for the site address to be shown on the policy. Home‑based operations still create third‑party risks (client visits, deliveries). Mobile or on‑site work usually means principals will ask for proof of currency and may stipulate higher limits.
Subcontractors and labour hire: whose policy responds?
If a subcontractor or on‑hire worker causes injury or property damage, claims often name everyone in the chain. Your public liability responds where you’re legally liable; the subcontractor’s own PL should respond to their negligence. Many policies even require subcontractors to hold PL at the same limit as yours—so request and file proof of currency. With labour hire, confirm who the employer is and that the agency carries appropriate cover (including workers’ compensation). Always check your contracts and PDS for conditions.
Injury to you or staff: workers’ compensation, personal accident and income protection
Public liability won’t cover injuries to you or your staff. If you employ people, workers’ compensation is compulsory for employee injuries. Sole traders without employees aren’t eligible, so consider personal accident/sickness and income protection to safeguard your income. These complement public liability for sole traders and address different risks.
- Workers’ compensation: Mandatory if you have employees; covers their work injuries.
- Personal Accident and Sickness: Weekly benefits up to 85%, generally shorter benefit periods.
- Income Protection: Monthly benefits up to 75% of income; premiums often tax‑deductible.
Tools, equipment and vehicles: add-on policies to consider
Public liability won’t repair your gear or your ute. To protect essentials, consider Portable Equipment (General Property) for theft and accidental damage on the go; Contents and Theft for items at your premises; Machinery Breakdown for key plant; and Commercial Motor for business-use vehicles. If you move tools or stock, add Marine Transit. These sit alongside public liability for sole traders to close common gaps.
Standalone policy or business pack: pros and cons
You can buy public liability for sole traders as a standalone policy or inside a business pack. A pack can bundle PL with building/contents, theft, portable equipment and business interruption under one premium, streamlining admin and often suiting lease or contract requirements. Some insurers only offer PL within a pack, so compare both approaches.
- Standalone — pros: simple, flexible, often cheapest.
- Standalone — cons: more admin; possible cover gaps.
- Business pack — pros: bundle discounts, one renewal, broader cover.
- Business pack — cons: pay for extras; pack sub‑limits.
How to compare policies and read the PDS without the jargon
Start by getting apples‑to‑apples quotes (same limit, excess, occupation and turnover), then read the PDS to confirm what’s covered, what’s excluded and what you must do at claim time. When you compare public liability for sole traders, focus on how defence costs are handled, where cover applies, and whether it satisfies your licence, contract or lease.
- Limit and legal costs: Check the indemnity limit (e.g. $5m, $10m, $20m) and how legal defence costs are treated.
- Inclusions/exclusions: Third‑party injury and property damage vs what’s not covered (your injuries, your property, professional advice).
- Locations: If you lease premises, ensure the site address is shown on the policy.
- Subcontractors: Some policies require your subs to hold equivalent PL—keep proof of currency.
- Products cover: Confirm if product liability is included or needs adding.
- Excess, sub‑limits and endorsements: Note any pack sub‑limits and special conditions.
- Costs and taxes: Premiums include GST plus state stamp duties/levies.
- Claims obligations: Notify promptly, don’t admit liability, and keep evidence; send any demand letters to your insurer immediately.
Buying public liability through National Cover
National Cover makes buying public liability for sole traders simple: get a tailored quote, we benchmark pricing using ASIC‑licensed analysts and back it with a price‑beat guarantee. Bundle PL with commercial motor, marine transit or a business pack, and rely on 365‑day support, transparent cover and expert claims management.
Frequently asked questions
Quick answers to common questions about public liability for sole traders in Australia. Always check your PDS for exact terms.
- Is it compulsory? Not generally; often required by licences (some trades), contracts or leases.
- What limit should I choose? Meet licence/contract minimums first; $5m is common, many principals require $10m–$20m.
- Does it cover injury to me or staff? No. Employees are via workers’ comp; sole traders consider personal accident or income protection.
- Are subcontractors covered? Your PL covers your liability; most policies require subs to hold their own PL—keep proof.
- Does it include products or cyber? Product liability may be included or added; cyber needs a separate cyber policy.
- Does it cover my tools or vehicle? No—use portable equipment, contents/theft and commercial motor for those.
Wrapping up
Public liability insurance is the safety net that keeps a single incident from derailing your business. Know what it covers, pick a limit that satisfies licences and contracts, close gaps with the right add‑ons, and follow the claims steps if something goes wrong. For sharp pricing, clear terms and help choosing the right limit, get a tailored quote with price‑beat support and 365‑day assistance from National Cover. Protect your livelihood today and keep working with confidence.
