If you run a small business, or a big business for that matter, you’ve probably been told you need public liability insurance.
But why? Why do you need it?
Depending on the size of your business, the cost of your public liability insurance could be anywhere from $400 a year to $40,000 a year – or more!
So it’s important to know why you need to have it.
Who Needs It?
First up let’s look at who needs this form of insurance.
Anyone who is self-employed or owns a business will most likely have a need for public liability. This could include any of the following:
- Sole trader
- Partnership
- Contractor
- Subcontractor
- Pty Ltd Company
So virtually any type of business where you’re not directly employed by someone else.
This includes anyone from a sole trader handyman startup through to a nation-wide company turning over millions of dollars per year.
Whilst many businesses need public liability to protect themselves and their owners, for some businesses it is a mandatory requirement.
For example electrical contractors in Qld must hold a minimum of $5 million public liability in order to maintain their licence. Without their licence, they cannot trade.
This is a government regulation, and there are many others in other states and for other industries.
Aside from government regulation, some companies have their own regulations for other businesses that they contract or subcontract work out to.
For example tradies undertaking subcontracting work for builders will often find that the builder requires all subcontractors on site to have their own public liability.
Or if you’re operating as a handyman doing property maintenance for real estate agencies, often the agencies will require that you provide evidence of your public liability insurance.
This is a good thing, as it protects you and your clients in the event that something goes wrong on the job.
What Does It Cover?
Now that we know who needs public liability, we need to know what it actually covers.
The policy is intended to respond in the event that your negligence results in property damage or personal injury to a third party.
In plain English, this basically means that you’ve stuffed up and someone else has been injured or had their property damaged.
An example of a claim could be where you’re working in a client’s roof, and you take a misstep, putting your foot through the ceiling.
The policy would cover the cost of repairing and repainting the ceiling. This would be considered a minor claim, but could still climb well into the thousands.
A more serious claim would generally involve personal injury. An example could be where you’ve left materials in a walkway without any signage, and a member of the public has tripped over and suffered an injury.
If it’s found that you’ve been negligent, your policy would respond to a claim for damages from the injured person.
Essentially, public liability is what’s going to save you having to sell your family home or go bankrupt in the event that something serious happens on the job, and it’s proven to be your fault.
So Why Do I Need Public Liability Insurance?
This brings us back to the original question. Why does my business need public liability?
You need it because if something goes wrong, and you’re a self-employed person or business owner, you’re the one who’s going to be financially liable.
We could be talking a few grand, or a few million in the event of a serious injury or death.
Some businesses could swallow such a loss, but many would be sent bankrupt with catastrophic financial consequences.
From under $400 a year, depending on your business type, you could protect yourself and your business from such huge risks.
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