There is no legal minimum in Australia for most businesses. How much public liability insurance you need is set by three things: the contracts, leases and permits you have signed, the size of the loss your work could realistically cause, and the people and property you operate around. Limits of $10 million and $20 million are the ones most commonly requested by principals, landlords and councils. Start with the highest limit your obligations demand, then test it against your worst site.
No law sets the number for you
Public liability is not compulsory for most Australian businesses. It becomes compulsory in practice through commercial pressure: a head contract, a shopping centre lease, a council event permit, a licence condition in some trades, or a client’s supplier policy. Each of those documents names a limit, and the highest one wins for the whole business. There is no benefit in holding two different limits for two different customers.
Because nothing is legislated, the limits people quote are conventions rather than rules. If a tender asks for twenty million, that is a contractual requirement you must meet, not a legal threshold you have breached by holding less. Say it that way when a client questions your certificate.
Start with the contracts you have already signed
Pull out every agreement that mentions insurance and list what each one requires. In our experience the common patterns look like this:
- Small retail and office leases: a limit in the ten million range, with the landlord noted as an interested party.
- Head contracts on construction and civil work: twenty million is commonly requested, sometimes more on infrastructure or work near rail, water or power assets.
- Council permits for markets, events and street trading: usually ten million, occasionally twenty for large public events.
- Government and large corporate supplier panels: twenty million, often with professional indemnity and cyber requirements alongside.
Those numbers are the ones customers ask for. They are not evidence that a claim would stop at that figure.
Two details in the same clauses cause more trouble than the limit itself. The first is a requirement to note the principal or landlord as an interested party, which the insurer has to endorse before your certificate satisfies the contract. The second is a requirement to hold the cover for a period after practical completion, which means you cannot let the policy lapse the week the job finishes. Both are cheap to arrange in advance and awkward to fix once a client is chasing documents.
Then test the limit against your worst case
The honest way to answer how much public liability insurance is enough is to describe the worst plausible day and price it. Not the everyday slip and fall, the one that ends the business. A fire that starts in your kitchen and spreads through the strip. A trench that undermines the building next door. A product that goes out to a national retailer and has to be recalled. Ask what the repair, the business losses of the neighbours, and the legal costs would add up to.
Three factors push the number up: how many people are near your work, how expensive the property around you is, and how far your product or service travels. A boutique studio in a standalone building and a fit out crew working in a live hospital carry very different exposures at identical turnover. Turnover alone is a poor guide.
Legal costs deserve their own line in that estimate. A liability claim that is defended over several years spends real money on experts, lawyers and court time before anyone decides who was at fault, and those costs can rival the damages. A limit that looks comfortable against the repair bill alone often looks thin once defence is added.
What sits inside the limit and what sits outside
Read how the limit applies before you decide it is adequate. Public liability is normally written as any one occurrence, so each separate event has the full limit available. Products liability is usually capped in the aggregate for the period, which means a run of claims from one batch shares a single pool. Legal defence costs may sit inside the limit or in addition to it, and that difference matters when a defended claim runs for years.
Then check what the policy will not answer for at any limit: damage to the property you are working on, faulty workmanship, professional advice, employee injury, and pollution beyond what the wording allows. Those belong to other sections of the program, which is why the limit question is really a business insurance question.
How trade and site change the answer
Food businesses carry contamination and fire risk in a shared tenancy, so a cafe or restaurant in a strip usually needs more than the lease minimum. Trades working at height, with hot works, or on someone else’s operating premises sit at the top of the range. Consultants who never attend a client’s site often need less liability and much more professional indemnity. The moment your work touches infrastructure, hospitals, schools or airports, expect the principal to ask for a higher limit and to check the wording, not just the number.
What FRS does
We read your contracts and leases, list what each one requires, and set a single limit that satisfies all of them without paying for cover no customer has asked for. We also test that limit against the worst case in your operation and tell you plainly when the two do not match. Where the exposure sits above the standard market, we look at an excess layer rather than leaving the gap open.
To talk through limits, wordings and certificates for your trade, see our public liability insurance page.
Frequently asked questions
Is public liability insurance compulsory in Australia?
Not for most businesses as a matter of law. It becomes compulsory in practice through contracts, leases, permits and licence conditions, and a handful of occupations have it written into their registration requirements. Check what your own agreements demand, since a client can refuse to let you start work without a current certificate.
Does a higher limit cost much more?
Moving from ten million to twenty million usually costs far less than doubling the premium, because most claims never approach the upper layer. The insurer is pricing the frequency of ordinary claims first. Ask your broker to quote both limits side by side, then decide with the figures in front of you rather than guessing.
How much public liability insurance does a sole trader need?
The same test applies. Contracts and site rules usually set the floor, and ten million is the figure most commonly requested of sole traders and small trades. If you work in occupied premises, around expensive plant, or at height, the higher limit is worth pricing before you commit to the cheaper one.
Does the limit reset after a claim?
For public liability written on an any one occurrence basis, the full limit is generally available for each separate event during the period. Products liability is commonly capped in the aggregate, so claims share one pool until renewal. Check whether defence costs come out of the limit or sit in addition to it.
