Most business owners agree that public liability insurance is important, but few know whether or not this form of cover is actually compulsory.
There are some business types which public liability will be compulsory for, and some that it is not compulsory for. But even for businesses that don’t have mandatory cover, it can still be a good idea to have some cover in place.
Before we look at whether or not this form of cover is compulsory for your business, it is important to run through a quick refresher. If you already know about it you can skip to the next heading.
What Is Public Liability Insurance?
Public liability insurance is intended to protect businesses and their owners from the financial consequences of any property damage or personal injury that they cause to another person or entity.
For a retail business this could include compensation for a slip and fall event, or for a tradesman it could it could be a claim involving faulty workmanship.
These are just two examples of the huge range of risks which businesses face every day, and that public liability insurance can protect against.
Who Is It Compulsory For?
When looking at whether or not public liability insurance is compulsory for you, it is important to keep in mind that there are two ways in which the cover can be compulsory.
Some businesses will be required to have public liability due to government legislation, whilst other will be required to have it by other businesses which they work with.
Government Requirements
The various state governments around Australia have a range of rules and regulations in place when it comes to public liability cover.
Tradesmen are often affected by these regulations. For example electricians in Queensland and Tasmania must have at least $5 million cover, as must plumbers in Victoria.
These requirements have been written into law, and tradespeople in these states will not be able to apply for or renew their contractor’s licence without the correct cover in place.
Company Requirements
Whilst only a handful of business types have mandatory public liability insurance set by the government, many more business must have cover due to the other companies they work for or with.
If you do any work within a shopping centre for example, the centre management will in most cases require that you have public liability insurance in place. If you do not, they will not allow you to work.
There are many examples of companies which have compulsory public liability insurance requirements, and these requirements will generally be detailed in the contracts between your business and theirs.
Should It Be Compulsory For Everyone?
There is a strong argument out there that public liability insurance should be compulsory for all businesses which deal with members of the public.
The reason for this is not just because of the protection given to the business, but also to people and other entities which are affected by a business’s activities.
Unfortunately there have been cases where companies have gone bankrupt in the event of causing someone else property damage or personal injury. This is a bad outcome not only for the business, but also for the person who is not likely to receive no compensation.
If all businesses where required to hold adequate public liability cover this situation may be able to be averted.
Given that the benefits far outweigh the public liability costs for most businesses, it certainly makes sense to have cover regardless of whether or not it’s compulsory for your business.