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What Public Liability Insurance Covers
Public liability insurance covers compensation, legal defence costs and related expenses when your business activities injure a third party or damage third-party property.
The policy pays compensation, legal defence costs and related expenses, so you can deal with customers, suppliers, contractors and the public. It is a core section in most business insurance programs.
Shopfront, office, building site or client premises, public liability insurance is fundamental cover for most Australian businesses. On a construction site it usually sits alongside contract works insurance. It sits within our business insurance range at Fortis Risk Solutions. Cafes and bakeries, grocery stores, real estate agencies and manufacturers each carry different liability exposures, so we build industry packages for them.
Public Liability Insurance: Cover Sections and Benefits
What Public Liability Insurance does not cover
Public liability insurance answers injury and property damage you cause to other people. It does not pay your own losses, look after your own workers or stand behind the quality of your work. Typical exclusions:
- Injury to your own employees, which sits with workers compensation and is compulsory for employers
- Damage to property you own, lease or have in your care, unless an extension is arranged
- The cost of redoing faulty work, as opposed to damage that the faulty work caused
- Liability accepted under a contract that goes beyond what the law would impose
- Claims about advice or professional services, which belong on professional indemnity
- Product recall costs, and defects you knew about before the goods went out
- Asbestos, and work above or below the heights and depths stated in the schedule
FRS reads your contracts before placing the policy, since indemnity clauses in head contracts and leases regularly ask for more than a standard wording gives.
How Public Liability Insurance premiums are set
Public liability insurance is rated on how much contact you have with the public and on what happens when something goes wrong. Turnover is the starting point, then the trade sets the rate. Factors:
- Annual turnover, and for trades the split between labour and materials
- Occupation, since roofing, electrical work and hot work sit well above office based activity
- The limit of indemnity required, often set by a landlord, a council or a head contractor
- Where the work happens: your own premises, client sites, or restricted sites such as rail and mines
- Use of subcontractors, and whether they hold their own policies
- Claims history, including incidents reported that were never paid
- Safety systems, site inductions and records of inspections
Liability usually sits inside a business pack, so the rest of the pack affects what an underwriter will do on the rate. FRS quotes it packaged and standalone when the exposure is unusual.
How to claim on Public Liability Insurance
Liability claims are won or lost on what was recorded on the day. A slip in a doorway can arrive as a letter of demand two years later, when nobody remembers the weather or the floor. The FRS process:
- Call FRS as soon as someone is injured or property is damaged, even if no claim has been made
- Do not admit liability or discuss fault, and refer anyone asking about insurance to us
- Photograph the scene, the surface, the lighting and any sign or barrier before anything is moved
- Take witness names and secure CCTV before the recording is overwritten
- Report malicious damage or an assault on your premises to police and keep the report number
- Send us every letter and court document unanswered, and FRS lodges the claim and manages the defence to settlement
The reporting steps are on our make a claim page.
Public Liability Insurance compared with Professional Indemnity
| Question | Public liability | Professional indemnity |
|---|---|---|
| What it covers | Injury to other people and damage to their property | Financial loss a client suffers from your advice or professional service |
| Who buys it | Trades, retailers, hospitality, event holders, anyone the public meets | Consultants, designers, accountants, agents and other advisers |
| Typical trigger | A customer falls in your shop, or your work floods the unit next door | A drawing is wrong, a report misses something, a deadline is missed |
| Sits with | Property, motor and workers compensation | Management liability and cyber |
Builders, engineers and consultants who both design and physically work on site need the pair, because one claim can raise both. FRS matches the two limits and the wordings so professional indemnity and the liability policy do not argue over which one responds.
Public Liability Insurance FAQs
It is not compulsory by law in most cases, but it is often required by contract. Landlords, councils, principals and event organisers commonly require it. Given the size that third-party injury and property damage claims can reach, most businesses treat public liability insurance as essential.
Public liability covers incidents arising from your business activities, such as a customer slipping in your shop. Products liability covers injury or damage caused by products you make, supply or sell. Both usually sit in one policy. Claims about advice or professional services belong to professional indemnity insurance.
Public liability policies differ in wording, exclusions and claim handling, not only in price. As your broker, FRS helps you:
- Clearly define and disclose your business activities
- Compare insurers beyond the headline premium
- Negotiate cover extensions and exclusions
- Act as your advocate if a claim arises
The wording you buy is what the insurer measures a claim against.
No. Employee injuries are handled by workers' compensation insurance, which is compulsory in Australia. Public liability insurance responds only to claims from third parties. Incidents involving your vehicles sit outside it too, under commercial motor insurance.