Estimated reading time: 10 minutes
TL;DR
Public liability insurance is one of the most broadly applicable covers for Australian small businesses. It’s not always legally required, but it’s frequently required by clients, landlords, and contracts and the cost of a single uninsured claim can easily exceed an entire year of premiums many times over. Most businesses should have it from day one.
Table of Contents
What is public liability insurance?
Public liability insurance protects your business against claims for injury or property damage made by a third party, like a client, a visitor, a member of the public, or anyone who isn’t your employee, as a result of your business activities. It covers your legal defence costs, compensation payments, and court settlements if someone holds your business responsible for harm they’ve suffered.
Products liability, which is typically bundled into the same policy, extends that protection to cover claims arising from a product your business makes, sells, or supplies.
In plain terms: if something goes wrong involving your business and someone else gets hurt or their property gets damaged, this is the cover that keeps it from destroying what you’ve built.
Key facts
- $10 million is a widely cited benchmark in the Australian market, and in Pocket’s experience. The majority of commercial leases and corporate client contracts specify this as the minimum required limit.
- Legal defence costs alone (even when you win) frequently exceed the original compensation amount claimed
- Public liability and professional indemnity are two different policies covering two different types of risk, many businesses need both
- Products liability claims can arise years after a product was made or sold, meaning cover at the time of sale matters even if your business has changed since
What does public liability insurance cover?
Public liability
Public liability covers your business against third-party claims for:
| Claim type | Example |
|---|---|
Bodily injury | A client trips over a cable in your office and breaks their wrist |
Property damage | You spill coffee on a client’s laptop during a meeting |
Legal defence costs | A supplier sues you alleging your staff damaged their equipment on-site |
Court settlements | A court finds you liable for a visitor’s injury and awards compensation |
Medical expenses | Emergency and ongoing treatment costs for an injured third party |
An important point on legal costs: even if you’re not at fault, defending a claim properly costs money. A disputed claim that goes through the court system can generate tens of thousands in legal fees before a decision is reached. Your policy covers those costs regardless of outcome.
Products liability
Products liability (typically included in the same policy) covers claims arising from products your business makes, sells, distributes, or supplies:
| Claim type | Example |
|---|---|
Injury from a product | A customer is injured by a faulty tool you sold |
Property damage from a product | A cleaning product you sell corrodes a customer’s benchtop |
Defective product claims | A product fails to perform safely and causes loss |
Goods supplied as part of a service | Materials you installed cause damage after the job is complete |
Products liability claims have a long tail. A product sold two years ago can generate a claim today, which is why maintaining continuous cover matters for businesses that sell physical goods.
One important point for importers: if your business imports goods for sale in Australia, you are treated as the manufacturer under the Australian Consumer Law — even if you didn’t make the product. This means you carry the same products liability exposure as a manufacturer, and cover is not optional.
What public liability insurance doesn't cover
Understanding the exclusions is just as important as knowing what’s included:
| Not covered | What covers it instead |
|---|---|
Damage to your own property or equipment | Business property / contents insurance |
Your employees’ injuries | Workers’ compensation insurance (compulsory if you employ) |
Your own professional errors or advice | Professional indemnity insurance |
Intentional or criminal acts | Not insurable |
Contractual liability | Only covered if specifically included in your policy |
Motor vehicle incidents | Commercial motor insurance |
Your own financial loss from a claim | Varies – speak to a broker |
The most common coverage gap founders encounter is confusing public liability with professional indemnity. They cover fundamentally different things. See the next section.
Public liability vs professional indemnity: what's the difference?
This is the question Pocket brokers get asked most often. The distinction matters because many businesses need both and assuming one covers the other is how business owners end up with gaps.
| Public Liability | Professional Indemnity | |
|---|---|---|
What it covers | Physical injury or property damage to a third party | Financial loss caused by your professional advice, services, or errors |
Who claims | Injured person, property owner | Client who suffered financial loss |
Classic example | Client trips over your cable, breaks their wrist | Client acts on your advice, loses money, blames you |
Who needs it | Almost any business with physical interaction with clients or the public | Anyone who provides professional advice, designs, or services for a fee |
Legally required? | Not generally, but frequently required by contract | Compulsory in some regulated professions |
Do you need both? If your business involves both physical client interaction and professional advice or services, the answer is almost always yes. A physiotherapist, a building consultant, a financial planner – all have exposure on both sides.
Do you need public/products liability insurance?
Almost certainly yes, if:
Clients or members of the public visit your premises
You visit clients at their premises to deliver your service
You work at third-party sites (tradies, contractors, event staff)
You sell, supply, or distribute physical products, online or in person
Your commercial lease requires it (most do)
A client contract specifies minimum liability cover (increasingly standard)
You operate in a co-working space or shared office
Probably yes, even if:
You work from home and rarely see clients in person. If you sell products, you have products liability exposure regardless of where you work
You think your work is low-risk. Liability claims are often for incidents that felt trivial at the time
You’re a sole trader. Your personal assets can be pursued if your business can’t cover a judgment
Potentially not required, if:
You’re a purely digital, service-only business with no physical interaction with clients, no products, and no premises requirements…though even then, a lease or a client contract may bring you into scope
The practical reality: most operating businesses need public liability cover. The question for most founders isn’t whether to get it, but how much and under what terms.
How much public liability cover do you need?
Coverage in Australia is typically sold in the following limits:
| Coverage limit | What’s common in the market |
|---|---|
$5 million | Sole traders and micro businesses with limited client interaction and no contracts specifying higher limits |
$10 million | Most small businesses – standard requirement for commercial leases and the majority of client contracts |
$20 million | Growing businesses, those working with corporate or government clients, or businesses in higher-risk industries |
$50 million+ | Large events, major construction, export businesses, or specific contractual requirements |
The most common mistake: underinsuring because a lower limit premium looks attractive, then discovering that a key client contract requires $10 million or $20 million only after you’ve already purchased a $5 million policy.
Before buying, check: your lease agreement, your client contracts, your industry association requirements, and your licensing conditions. These four sources will usually tell you the minimum you need — and it’s frequently $10 million.
What does public liability insurance cost in Australia?
Public liability premiums vary significantly and the range is wide enough that any single figure would be misleading. The factors that influence your premium include your industry, your annual revenue, the nature of your work, your claims history, your coverage limit, and whether your activities carry higher physical risk.
Rather than a ballpark number that may not reflect your situation at all, the most useful thing we can do is give you an accurate quote based on what your business actually does.
Get a quote with Pocket → or book a free call and we’ll give you a real number.
What affects your public liability premium?
Insurers assess a range of factors when pricing your policy. Understanding these helps you get an accurate quote and potentially reduce your premium:
Business characteristics that increase premium:
Higher annual revenue (premium scales with turnover in many policies)
Work involving physical risk like construction, events, childcare, food handling
Products sold internationally (especially to the US/Canada)
History of prior claims
Work on high-value third-party properties
Factors that reduce or stabilise premium:
Strong risk management and documented safety procedures
No prior claims history
Lower coverage limit (though don’t underinsure to save premium)
Longer broker relationships with demonstrated business stability
What you can control: Disclosure accuracy at application. Underestimating your revenue or understating your activities can create a disclosure problem that voids cover at claim time. Get this right.
By founder stage
Start smart — pre-launch to year one
You need public/products liability from day one if:
You’re meeting clients face-to-face (at your office or theirs)
You’re working from a co-working space or rented premises
You sell, supply, or distribute physical products online or in person.
Your lease requires proof of insurance
You’re hiring contractors who work on-site
Typical coverage at this stage: $5–10 million. Most commercial leases and client contracts require a minimum $10 million, so starting there saves you renegotiating later.
Note: if you import goods for sale, you’re considered a manufacturer under Australian law and products liability cover is particularly important.
Scale strong — growing and hiring
Your cover needs to grow with you. Review it when:
You’re taking on larger clients who require higher limits ($20 million+)
Your revenue exceeds $1 million — higher revenue means higher risk exposure
You’re selling products to retailers (they’ll require higher limits)
You’re running events, workshops, or exhibitions
You’re importing or beginning to manufacture products
Typical coverage at this stage: $10–20 million. Some corporate and government contracts require $20–50 million.
Stay protected — established and optimising
At this stage, the risk isn’t being uninsured, it’s being improperly insured as your business has changed. Review your cover if:
You’ve changed what you sell or how you deliver it
You’ve moved into new markets or added physical locations
You’re exporting internationally
You’ve had a near-miss incident that wasn’t quite claim-worthy
Your premium has jumped significantly at renewal (a signal to shop around)
Typical coverage at this stage: Custom. A broker conversation is more valuable than any general guidance at this point.
Frequently asked questions
1. Is public liability insurance compulsory in Australia?
It is not compulsory under general law for most businesses. However, it is functionally compulsory in many situations required by commercial leases, client contracts, government procurement, licensing conditions (e.g. liquor licences, building licences), and professional body membership. In practice, most businesses that operate commercially need it.
2. What is the difference between public liability and product liability insurance?
Public liability covers injury or damage that happens as a result of your business activities, or someone visiting your premises, or you working on a client’s site. Products liability covers injury or damage caused by a product your business made, sold, or supplied. In Australia, both are typically included in a single combined policy.
3. Does public liability insurance cover me if I work from home?
It depends on the nature of your work. If clients visit you at home, you have visitor injury exposure. If you sell physical products from home, you have products liability exposure. If you work entirely digitally with no client visits and no physical products, your exposure is lower — but check your lease or mortgage conditions, as some require it regardless.
4. Does public liability insurance cover subcontractors?
Generally, public liability policies cover your direct business activities and not the independent activities of subcontractors. If you engage subcontractors, they should hold their own public liability cover.
It’s also worth checking whether your policy covers vicarious liability — that is, whether you’re exposed to claims arising from a subcontractor’s actions while working on your behalf. Some policies exclude this, and if you regularly engage subcontractors, it’s an important gap to be aware of.
A broker can help you review your policy wording and confirm whether your subcontractor arrangements are adequately covered
5. How much public liability insurance does my business need?
Cover limits vary depending on your industry, the nature of your work, and your contractual obligations. $10 million is a common benchmark in Australia that many commercial leases and client contracts specify as a minimum. For businesses working with corporate or government clients, or operating in higher-risk industries, $20 million is increasingly common.
That said, the right limit for your business depends on your specific circumstances. We’d recommend speaking with a broker who can review your lease, contracts, and licensing requirements and help you determine an appropriate level of cover.
6. Can I get a Certificate of Currency quickly?
Yes. A Certificate of Currency can typically be issued same day once your policy is bound and payment has been confirmed. This is the document clients and landlords request as proof of insurance. Get a quote with Pocket and we’ll get this sorted quickly once everything is in place.
7. What happens if I don’t have public liability insurance and someone makes a claim?
You’re personally exposed. As a sole trader, that means your personal assets ;like savings, property, vehicle can be pursued to satisfy a judgment. As a company, the business assets are at risk, and depending on circumstances, director liability can apply. Legal defence costs alone can be high before a claim is settled.
8. Does public liability cover legal defence costs even if I’m not at fault?
Yes. This is one of the most valuable aspects of the cover. A disputed claim that goes through the courts — even one you ultimately win — generates significant legal costs. Your policy can cover those costs regardless of whether you’re found liable.
Related guides
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Call: 1300 475 092 | Email:hello@withpocket.com.au
With Pocket is a business name of Insurance Services Holdings Pty Ltd (ABN 36 612 629 295, AFSL 491165). Member of NIBA and part of the Steadfast Group. This article is general in nature and does not constitute financial advice. Consult a licensed broker for advice specific to your circumstances.
