Public Liability Insurance Q&A’s

Public Liability Insurance Q&A’s

Public liability insurance is an important protection for business owners in Australia. Here are some of the most frequently asked questions about public liability insurance and other essential insurance coverages for Australian business owners:

Q         Is Business insurance the Same as Public Liability Insurance?*

A          Business insurance takes many forms. One way to evaluate your business insurance requirements is to make a list of your assets at risk. For example, you may own or rent office space and use office or other business equipment. You may have a fleet of commercial vehicles. You may have employees you must protect from injury. In some professional consultancies, you provide advice for a fee and in some trades, you may repair customers’ items such as machinery. All of these create liabilities. Proper insurance can help protect your business and its valuable assets. With the help of an experienced insurance broker, you can determine which insurance coverage is suitable for you.

Here’s an example of a small contracting business and that tradesperson’s typical assets.

  • Leased office space
  • Storage facility for material and equipment storing
  • Small vehicle fleet of two utes, two trucks and one passenger car
  • Eight employees, including four tradespeople, one supervisor, two dispatchers, and an office manager
  • A backhoe and an excavator
  • Various tools and an ongoing supply of materials, many temporarily located at job sites

Because the contractor’s employees perform work for business owners and clients may visit their location, public liability insurance protects the business if they injure a client or damage a client’s property.

This insurance does not cover their employees for their work-related injuries. A business needs workers compensation coverage to protect its employees.

Additionally, a business will want to protect equipment and materials. A business owner can accomplish this by purchasing cover via a business insurance pack.

The business owner has computers and may handle cash that requires insurance coverage, as well.

If the business owners lose work because of their own injuries, they may need some form of income protection insurance.

And should a large loss occur to their building, such as a fire that damages the building and a few of the fleet vehicles, a business may need business interruption insurance to replace lost income while rebuilding the office and replacing vehicles.

A commercial vehicle policy could replace fleet vehicles if the owner purchased physical damage coverage.

As you can see, the term “business insurance” covers many types of insurance. Public liability may protect a business against allegations of negligence whether those allegations derive from third-party property damage or bodily injury.

 

Q          Is Public Liability Insurance Compulsory?*

A          Public liability insurance is not mandatory for all businesses in Australia. However, if you’re a trade contractor such as an electrician or plumber, coverage may be mandatory. Regulations vary by jurisdiction.

Do you need public liability insurance? This is one of those issues best summed up by the old saying: “We can’t make you do anything, but we can make you wish you had.” Seriously, as a business owner, each task you perform, each visitor to your office, brings risk to your doorstep. Even if you do nothing wrong, a customer could allege you did and make a claim against you and your business. Do you want to face the cost of defending yourself against such a lawsuit? Public liability insurance is a key risk management tool to help keep your business solvent and growing.

 

Q         I’m a Commercial Landlord. Do I Need Public Liability Insurance?*

A          Yes. Any tenant occupancy can generate a number of risks. For example, your tenant may have visitors injured while on their premises or as they enter the building. You may have control over that access, and even if you do not, an injured person could sue you as the building owner.

While most allegations against commercial landlords arise out of maintenance issues, a properly tailored public liability policy can protect you against a variety of claims. As a landlord, you may be a target of claims even if you weren’t negligent. Public liability cover provides landlords with peace of mind as they manage their commercial properties.

 

Q         Does Public Liability Insurance Cover Damage to Commercial Property?*

A          Public liability insurance protects you against allegations of negligence resulting in property damage or bodily injury. You’ll need a landlord policy or building coverage to protect you when tenant damage or weather damage occurs to your property.

 

Q         Why Do I Need Public Liability Insurance? After All, I’m Just a Sole Trader.*

A          No matter how careful you are in your craft or trade, your customers or visitors to your location can allege you were negligent. If you provide, repair or develop products, an injury can occur as a result of the use or misuse of your product. Public liability insurance may provide you with an investigation, defence and potential settlement of a negligence claim made against you. While Australian laws may not require you in your occupation to purchase public liability insurance, going without public liability cover to save a few dollars is not a sound business decision. In some areas, legislation requires the purchase of public liability insurance. Trades such as electrical or plumbing may require coverage.

In today’s litigious environment, even the smallest trade contractor can face negligence allegations. A public liability policy can provide you with more protection for your hard-earned assets.

 

Q         Do I Need Professional Indemnity and Public Liability Insurance?*

A          Very often, contractors and consultants believe they need only public liability insurance. This covers you against allegations of negligence if you or your employees accidentally injure someone or damage their property. However, professional indemnity coverage is critical to most small business owners who offer advice for a fee.

Consider this scenario. You are an information technology contractor hired to provide computer services to a large company. Part of those services includes data backup, storage and the management of a software program to achieve mutually agreed outcomes. Despite your efforts, the customised scheduling software you developed and manage does not deliver the desired outcomes, and even worse, left the business unable to book new work for several days.

The client files a claim against you for loss of income and the cost to repair his system. You face a lawsuit. Your professional services, the client alleges, were faulty. A case like this, which can happen to consultants of almost every description, would require a professional indemnity policy.

Purchasing suitable cover for your business risks can be easier with the help of an experienced business insurance broker.

 

Q          I’m a Consultant. Do I Need Public Liability Insurance?*

A          Some consultants go without public liability insurance. If no one ever visits your premises and you never work on or take possession of your clients’ property, you may feel that you do not need public liability insurance. However, if others can access your space, you visit clients or other stakeholders, or you work in a retail premises where others come and go, you should consider this important coverage. For example, even if visitors never enter your premises, what if they fall outside your business on the sidewalk?

Public liability insurance provides coverage for bodily injury or property damage to others when they allege you were negligent. Additionally, your business model may change as your business grows. Don’t think, “I’ll worry about that cover soon” if you have visitors to your location or any changes in your corporate operations.

A public liability policy for consultants is affordable and may be able to combine your cover with professional indemnity insurance at a reasonable cost. Why risk everything when carefully chosen insurance cover can protect you against certain negligence allegations?

 

Q         Do I Need Public Liability Insurance as a Subcontractor?*

A          Many builders or prime contractors will not hire you without proof of public liability and other appropriate insurance such as personal accident insurance or workers compensation cover. The general contractor usually insures the project. However, that coverage probably may not extend to errors you make or injuries or damages that arise out of their sub-contractor’s negligence. Even if their policy would respond they prefer that any claims are made on the subcontractor’s policy rather than their own. Therefore, most prime contractors require that subcontractors provide proof of their own public liability or other coverages to satisfy the project’s contractual demands.

There are many risks to consider when you subcontract. An experienced insurance broker can help you determine the cover suited to your particular contract.

 

Q         Does Professional Indemnity Insurance Cover Public Liability?*

A          No, professional indemnity cover is distinct from public liability insurance. Professional indemnity covers you for the professional advice you render. For example, if you are a construction consultant, others can sue you for an alleged breach of your professional duties if that breach causes damages or injuries. Here are the following occupations that might benefit from professional indemnity cover.

  • Real Estate Agents
  • Computer consultants
  • Architectural and engineering professionals
  • Nurses and doctors
  • Massage therapists
  • Beauty consultants
  • Psychologists
  • Travel agents
  • Consultants
  • Web designers

Combined Professional indemnity and public liability policies may be available for some of these occupations.

 

Many business owners face both exposures – professional losses and public liability losses. Whether you have visitors is only one consideration when deciding on the appropriate insurance cover for your business. Discussing your business operations with a public liability insurance insurance broker can help you determine how to handle the risks that you face.

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