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What does Public Liability Insurance Cover?

Public Liability Insurance protects you and your business against the financial risk of being found liable to a third party for loss or damage to property. Whilst operating your business you are always at risk of causing third party property damage. If you are found to be legally liable, the financial repercussions can be devastating. If one considers the legal defence costs alone, these could put you out of business.

With the right Public Liability cover in place, the insurance company will provide the funds to cover your legal costs and any compensation claims, leaving your business free of financial risk. Phew!

What does it cover?

Protect against 3rd party property damage

If you have members of the public entering your place of business or you perform your work at a customer’s premises or any another venue and you accidentally cause property damage, you face the risk of legal action. Public Liability Insurance protects you against claims from any third parties by covering any compensation awarded against you as well as legal defence costs (even if you are eventually not found liable).

Real Claim example:

A boot camp operator, working in a public park, placed all the keys of his customers in a bag to keep them secure. It was dawn and the participants were too focused on their activities to notice the bag being stolen by some thieves. As a result, several cars were either stolen or broken into. Insurers settled numerous claims (within weeks) totaling tens of thousands of dollars because the customers alleged the operator had taken responsibility for the keys.

Is Public Liability Insurance mandatory for your business?

If you rent your premises, public liability may be a requirement from your landlord. Or if you take out a contract with a large organisation they may stipulate that you have certain insurances to work for them. For example, doing any work for any metropolitan council will require a minimum $2m cover.

Every business should consider Public Liability Insurance – even home-based businesses. It covers you and the actions of your employees for potential liabilities to third parties if your products or services cause property damage. For example, it can provide protection if an employee damages your customer’s property whilst carrying out garden maintenance on their property.

Public Liability not only covers the cost of compensation but your defence costs as well. Without the correct level of cover, a potential claim could cost you thousands of dollars (or even hundreds of thousands of dollars), and could be enough to put a small business out of business!

This is general advice only.

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