Public liability guide

What is Public Liability?

Have you ever had someone trip, fall and hurt themselves in your showroom? Have you ever accidentally damaged someone else’s property while out on a job? Has a piece of faulty equipment you are using caused an accident?

If you have ever found yourself in the awkward position of having accidentally caused someone else a loss or injury in the course of running your business, then you will be able to see the value of a public liability insurance policy.

Public liability insurance is designed to protect your business against claims resulting from accidents or injuries that occur as result of your business activities, as well as accidental damage to property owned or controlled by someone else.

As a business owner you are accountable to third parties that come into contact with your business – including customers, suppliers and anyone else who may be involved with your business. If damage or an accident occurs while you’re carrying out your business, the impacted third party may be able to make a claim against your business, which can result in costly legal fees as well as the obligation to pay for the damage or injury you may have caused.

If you work with clients or customers, in public spaces, visit spaces owned or controlled by others, have visitors to your premises, or manufacture products; public liability insurance is your best defence against potentially costly personal injury or property damage claims.

What Does Public Liability Insurance Cover?

When planning the continuity of your business, it’s important you are aware of what your insurance policy covers. Every policy differs, but below are some typical inclusions for a Public Liability policy.

Some things you may be covered for:

• Legal costs incurred in the defence or settlement of a claim
• Cover for others that may be acting on behalf of your business when the incident occurred
• Loss or damage of goods – which are in your care custody or control which you do not own
• Loss or damage of someone else’s property that occurs while performing your service
• First aid expenses at the time of an incident
• Injury to others who sustain injury whilst visiting your premises

What Are Some Of The Things Public Liability Doesn't Cover Me For?

• Employer’s responsibility for injured workers (workers compensation)
• Aircraft products
• Asbestos
• Punitive damages (damages awarded where a judge believes you acted so badly that extra damages are awarded)
• Liquidated damages
• Gradual pollution
• Products recall
• Liabilities assumed under contract which you would not be liable for at common law (that is if you enter into a contract which assumes the liability of others, if the law would not consider this your liability had you not signed the contract)

Are My Employees Covered?

Generally speaking, public liability protects against claims made against your business by customers or the public, it does not cover employees injured on the job – this is covered by mandatory workers compensation insurance.

Of course all policies have slightly different criteria but most liability policies will not cover a worker that is considered a worker under workers compensation law in the state where the business operates (each state has differing definitions of what a worker means in its legislation). There are some exclusions to this - for example, unpaid work experience students and voluntary workers are not necessarily excluded from your public liability policy as they may not be considered “employees” by workers compensation legislation so an injury to one of these workers may be collectible under your liability policy - meaning these workers may be covered for injury sustained on the job.

There are a number of other parties who are not employees (or workers) by definition of the workers compensation legislation such as labour hire workers (agency labour) who may be covered for injury by a liability policy. An agency worker is technically not an employee of the insured and may be covered for workers compensation by the agency that hired them, but as they were on your premises and under your supervision it may be possible for a claim to be made against you for injuries they may sustain.

When it comes to contractors and sub-contractors, it will often depend on the type of work being undertaken, the supervision you provide and if there was legal liability or negligence involved.

The actions of staff / employees while they are acting on behalf of your business are covered by your policy – for example if the actions of one of your employees (part-time, full-time or casual) causes an injury to a member of the public or another third party or causes damage to third party property, your public liability insurance will provide protection against claims made in relation to the incident.

It is important to note that sub-contractors may not automatically be covered under your public liability policy. As sub-contractors can work for more than one company at a time they may need to be specifically added to your policy (which will generally mean an increase in premium).

A sub-contractor may not automatically be covered by your policy for the work they do for you, but they are still third parties to your policy so it is possible they could still make a claim against you.

A lot of the time sub-contractors have their own public liability policy. Either way, it is important to talk to both your sub-contractor and your broker to ensure you are covered should an incident occur.

All advice given is general in nature and all policies are different. You should consult your independent insurance adviser if you are in doubt about what cover you need or what coverage your current policy provides.

Final Word

Public claims against your business can be costly, interrupting trading and impacting your hard earned reputation. Ensure you have suitable public liability insurance cover to mitigate against this factors.