How Much Public Liability Insurance do I Need?

The amount of public liability insurance that you need will depend on various factors including the type of work that you do, the potential and level of risk to the public of your work, the size and number of the clients you have and external factors such as contract or industry requirements.

In general terms, your public liability policy will need to provide enough cover for any potential claims against you for compensation for personal injury, damage to property as well as your legal representation and the costs of defending such compensation claims in court.

Generally, public liability insurance is available in either $5 million, $10 million and $20million limits for most Australian small business owners.

While you can’t look into the future to decide how much cover you’ll need, it is good practice to consider possible worst-case scenarios, assess the potential damages that could result from an accident or injury caused by your work, and buy sufficient insurance to cover those situations.

The amount of cover you require may also be dependent on the industry you work in and the types of clients that you serve. Some industries require a business to have a specific amount of coverage before you are eligible to work. Individual clients may also require you to have a specific amount of coverage in place to comply with the terms of their contract with you.

$5 million Public Liability Insurance limits is the base level of cover ; and is generally selected only by sole traders in  relatively low risk occupations in terms of liability , such as consultants and contractors .

$10  million Public Liability Insurance limit is a popular level of cover for many Australian start up and micro businesses with a few employees and limited risks.

$20  million Public Liability Insurance limit is a popular level of  comprehensive  cover for many Australian small businesses with a number of employees and risks.  $2o million public liability cover is also mandated by some builders and councils for trade businesses that work for them,  and by landlords for commercial tenants.

It’s vitally important that you take the time to work through various possible scenarios that could occur when conducting your work and estimate accordingly.

You’ll need to think about all of the activities that comprise your work and their potential risk to third parties. The scale of work that you perform and the potential damages that could result is another way of assessing the level of financial protection that your public liability insurance policy will need to provide if a claim is made against you.