Whether you work in retail, hospitality, finance or engineering you’ve probably heard of public liability. In fact, most people probably wouldn’t even dare think of trading unless they had a public liability insurance policy in place.
Although in some industries, such as community organisations or property management it is compulsory to have public liability insurance, in many others it is often a pre-condition of trade or enforceable through business association memberships.
For example, a retailer in a shopping centre or a franchisee will almost certainly be required to have public liability as a pre-condition of trade. But what is it? In short, it protects your business for any physical injury or property damage suffered by a third party – potentially your customer.
So you’re an accountant and an elderly client slips on that shinny new wooden floor of yours – will your business compensate the client for medical bills with a few hundred thousand dollars out of its bank account? Probably not. Typically, businesses purchase between $10 million and $20 million worth of public liability cover. For office-based businesses, public liability can start from as little as $200, with doctor’s surgeries for example, starting at around $300 for $10 million worth of cover.
Of course, risk comes at a price and unfortunately if you happen to be in what an insurance company finds is a risky occupation, your business might have to pay a lot more for its insurance. Businesses such as grocery stores for example, can expect to pay between $1,000 and $2,000 whereas pubs or clubs can fork out up to $5,000 or more. In fact, some businesses are considered so risky that they can’t buy any public liability insurance at all.
In a litigious environment such as Australia, it would seem prudent to ensure that you have adequate protection – particularly given that in Australia, there is no cap on the amount of compensation awarded to a claimant. However, in a commercial sense it can mean the difference between new business and no business with customers often more comfortable using service providers with adequate protection – wouldn’t you?
Here’s even more reasons why!
July 6th, 2010 at 8:17 am
Vince,
Good comment but it appears quite focused on the personal injury side and nothing about property damage. I’ve also seen instances where it (PL) has been used to claim property damage.
In the example that I’m thinking of a tenant’s installed dishwasher water supply flexible hose ruptured (on a long weekend) and the water damage was significant to the affected floor and those below.
Other examples abound of contractors isolating fire protection while they work and having the whole building burn down. In an example that I know of the sub-contractor doing the work didn’t have sufficient PL cover for the damage and so the building owner successfully claimed against the agency which engaged that contractor.
Remember that Public Liability cover is really quite cheap for the protection provided.
Compare this to Professional Risk (by the way anyone who gives advice, provides a service, attests to performance or design, etc. etc. – needs cover reflecting the maximum of any perceived claim + legals) where the premium is calculated on your business turnover as well as the category of highest risk and you’ll see what I mean.
Now Vince, because you are providing this blog as part of your professional activities, you would/should need to declare that you are providing such advice in this global media to the provider of your professional risk cover (as what you are doing is promoting them as well, I’d think that they’d look kindly on any premium variance).
July 6th, 2010 at 8:03 pm
Ian that is correct – and there will be plenty more installments on public liability! Don’t get me started on Professional Indemnity – I’ll be here forever!
If only they were that reasonable!