Public liability insurance is the cover that helps pay legal and compensation costs if a customer, supplier or member of the public is injured, or their property is damaged, because of your negligent business activities. Whether you run a café, work as a tradie, visit clients’ sites, or welcome customers to your premises, it’s designed to protect your cashflow and reputation when an accident turns into a claim.
In this guide, we explain exactly what public liability insurance covers (and what it doesn’t), who typically needs it in Australia, and when it’s required by law or contract. You’ll learn how much cover to consider, how it compares with professional indemnity, product liability and workers’ compensation, typical claim scenarios, costs, key policy terms, and how claims work. We’ll also share simple risk tips and answer common questions so you can choose with confidence.
What does public liability insurance cover?
Put simply, the public liability insurance definition comes to life in what it covers: your legal liability when a third party alleges injury, death or property damage due to your negligent business activities. It can also fund your legal defence and any settlement or court‑awarded compensation. Coverage varies by insurer and policy; check the Product Disclosure Statement for exact inclusions, limits and conditions.
- Personal injury to third parties: including death or recognised psychiatric illness.
- Damage to third‑party property: from customer belongings to damage to leased premises.
- Consequential loss: directly arising from your negligence (in some policies).
- Product liability extension: injury or damage caused by goods you sell or supply (often included).
What public liability insurance doesn’t cover
Public liability isn’t a catch‑all for every mishap. Policies focus on third‑party injury and property damage caused by your negligent business activities, but they also include clear exclusions. Always check your Product Disclosure Statement (PDS) to understand the limits, conditions and what sits outside your cover.
- Injuries to you or employees: workers’ compensation covers this.
- Damage to your own property or tools.
- Rectifying faulty workmanship itself.
- Professional advice/errors or unlawful acts.
- Contractual liability you’ve assumed.
- Asbestos, pollution and advertising injury.
Who needs public liability insurance in Australia?
If your business deals with customers, suppliers or the public—at your premises, at theirs, or on worksites—you should consider public liability insurance. Any third‑party injury or property damage linked to your negligent business activities can lead to costly claims and legal fees. It’s also commonly requested in leases and service contracts.
- Trades and contractors: working at client sites and homes.
- Retail, cafés and hospitality: venues with daily foot traffic.
- Professionals and consultants: seeing clients or visiting them.
- Tenants and suppliers: leasing space, or selling/supplying goods (often via a product liability extension).
Legal and contract requirements to be aware of
Public liability isn’t universally compulsory across Australia, but it can be a legal requirement for certain occupations or licences depending on your state or territory. It’s also frequently mandated by commercial arrangements: landlords often require it in leases, and many clients write minimum cover limits into service contracts. Always read those terms alongside your policy’s Product Disclosure Statement so your obligations and exclusions line up.
- State/territory rules: Some occupations require public liability as part of licensing or permits.
- Leases: Landlords commonly insist you hold cover while occupying their premises.
- Contracts: Client agreements may specify a minimum sum insured and evidence of cover.
Remember, this cover doesn’t replace compulsory workers’ compensation for employees or compulsory third-party (CTP) injury insurance for vehicles. If in doubt, check with your state/territory regulator or seek professional advice on what’s required for your business.
How much cover do you need?
Choose a limit that covers a realistic worst‑case single incident for your business. Claims can quickly exceed $100,000 once legal defence and compensation are counted, and some reach hundreds of thousands. The public liability insurance definition only helps if your sum insured meets that exposure and any minimums.
Use these factors to size your cover:
- Contract or lease minimums you must satisfy.
- Nature of work: slips, food service, tradie risks.
- Public interaction and foot traffic volumes.
- Work at client sites and property values at risk.
- Product exposure if you sell or supply goods.
If unsure, ask your insurer or broker and read the PDS.
Public liability vs professional indemnity vs product liability vs workers’ compensation
These covers tackle different risks, and mixing them up can leave gaps. Public liability focuses on accidents harming the public; professional indemnity on your advice and services; product liability on goods you supply; workers’ compensation on your employees. Use the right mix for your work.
- Public liability: Third‑party injury or property damage from your negligent business activities; includes defence costs. Often includes product liability. Excludes injuries to you or employees.
- Professional indemnity: Claims from errors or negligence in professional advice/services; covers defence and settlements. Mandatory for some professions.
- Product liability: For those who make, sell or supply goods (including repairs). Covers injury, death or property damage caused by your product.
- Workers’ compensation: Compulsory for employers; covers employees’ work‑related injuries or illness. Separate to public liability.
Typical claim scenarios in Australia
Claims often arise from everyday mishaps where your business interacts with the public. Think slips, trips, accidental damage at a client’s premises, or a product gone wrong. Real cases have included customers fracturing a foot at a studio entrance and payouts exceeding $100,000 once legal costs are added.
- Slip on a wet floor in a café or shop.
- Burst pipe while drilling at a client’s home.
- Painter spills on carpets or furnishings.
- Customer trips over cables in your office.
- Food poisoning traced to your catering.
- Damage to leased premises during routine work.
How much does public liability insurance cost?
There’s no one-size price. Premiums are calculated on your risk and the cover you choose. Insurers look at what you do, where you do it, how often you interact with the public, and your claims history. Higher‑risk activities and higher limits generally cost more. Because legal defence and compensation can run into the hundreds of thousands of dollars, focus on value and an adequate limit, not just the cheapest sticker price.
- Business activities and risk: cafés with foot traffic, tradies at client sites, or food service typically rate higher.
- Scale of operations: more customers, jobs or locations usually mean more exposure.
- Cover limit and scope: larger sums insured and any added cover increase premium; product liability is often included.
- Contract requirements: mandated minimums in leases or contracts may lift the limit (and price).
- Claims history and controls: past incidents and poor risk management can push premiums up.
- Policy packaging: public liability bought within a business insurance package may be priced differently; always read the PDS.
Key policy features and terms to check
Before you buy, read the Product Disclosure Statement (PDS) so you know exactly what your public liability insurance definition translates to in practice. Focus on how claims are handled, what’s included, and the exclusions and limits that could affect your business or any contract you must satisfy.
- Limit of liability: meets your worst‑case and contract minimums.
- Defence costs: included, and how they’re applied to claims.
- Product liability: whether it’s included and its scope.
- Damage to leased premises: confirm treatment and any sub‑limits.
- Consequential loss: whether covered and on what basis.
- Key exclusions: employees, your own property, faulty workmanship, professional errors, contractual liability, unlawful acts.
- High‑risk exclusions: asbestos, pollution, advertising injury.
- Policy period: no cover for events outside the policy dates; check timing carefully.
How public liability fits with motor and business insurance
Public liability sits alongside motor and business insurance, not instead of them. For vehicles, you’ll need compulsory third party (CTP) injury cover with rego, plus motor insurance for vehicle and third‑party property damage on the road. Public liability then covers non‑motor incidents—slips, trips or accidental damage—arising from your business at your premises or a client’s site. Business insurance packs often bundle public liability with other covers.
How to make a claim
When something goes wrong, act fast and keep records. Notify your insurer promptly, don’t admit fault, and take reasonable steps to prevent further loss. Document the scene, injuries and damage, and forward any letters of demand or court documents immediately so the insurer can appoint assessors or lawyers.
- Make safe: mitigate further loss.
- Capture evidence: photos, CCTV, witness details, incident notes.
- Lodge the claim: by email with policy number and supporting documents; refer claimant contact to your insurer.
Practical risk management to reduce claims and premiums
Good risk controls cut down incidents, which can reduce claims frequency and severity—and may lead to sharper premiums over time. Focus on everyday exposures where you interact with customers, suppliers and the public, and document what you do so you can evidence it if a claim arises.
- Housekeeping: hazard sweeps; fix spills and trip risks fast.
- Barriers and signage: cordon areas during cleaning or works.
- Planned maintenance: test‑and‑tag electrics; keep service records.
- Training and supervision: checklists/SWMS; oversee higher‑risk tasks.
- Protect client property: drop sheets, isolate utilities, use spotters.
- Contractor controls: verify licences and certificates of currency.
- Products: track batches and suppliers; maintain a recall plan.
- Incident logs: capture near misses and implement improvements.
Common questions about public liability insurance
Got a quick question before you buy? Here are straight answers to what owners ask most about public liability insurance. Always check your Product Disclosure Statement—limits, extensions and exclusions differ between insurers.
- Is it compulsory? Not generally; sometimes needed for licences, leases or contracts.
- Are employees covered? No—use workers’ compensation for staff injuries and illness.
- Faulty workmanship? Not the fix; only resulting third‑party injury or damage.
Key takeaways
Public liability insurance protects your business when third‑party injury or property damage is alleged due to your negligent activities. If you deal with customers, suppliers or the public, you likely need it—choose a limit that meets your risks and any lease or contract minimums, and remember it doesn’t replace workers’ compensation or CTP. Ready to sort the right mix of public liability, motor and business cover at a sharp price? Speak with National Cover for tailored options and expert claims support.
