Public liability insurance is a common form of cover among businesses and business owners. It offers peace of mind against the cost of third party allegations relating to loss, damage to property, and injury. Legal action taken against a business can be financially crippling, and public liability insurance is an important aspect of mitigating the risk of potential allegations. 


That being said, there are limitations to public liability insurance and what it will cover. It’s far from the ‘be all and end all’ of business insurance, and should be bundled together with other policies for optimum protection and risk management. Take a look at some of the most common exclusions of public liability policies. 


What is public liability insurance, and who needs it? 

Public liability insurance offers protection against the cost of claims made in relation to business activities. In the event of injury to a customer, damage to property belonging to a client, or harm to a third party, legal action may be taken against you. Public liability covers associated legal fees, and the cost of any compensation or repairs that are deemed necessary if found liable. 


While public liability insurance isn’t mandatory for businesses, often it’s necessary in order to work with some potential clients or within certain contracts. Sole traders and small businesses benefit from having a public liability policy in place, as legal action taken against them could be severely crippling and impossible to recover from financially, leading to the cessation of business operations. Any business or business owner that interacts in public spaces or is involved with members of the public would benefit from public liability insurance. 



While public liability insurance is incredibly important for businesses, there are exclusions to what a liability policy will cover. Some exclusions are:


Injury to employees

Public liability insurance covers injury to customers, clients and members of the public, but not your employees. If your business hires employees, you are required by law to have a workers compensation policy in place. 


Property under your control 

Any property under your physical or legal control won’t be covered should it be damaged. For example, if your employee’s vehicle is damaged while they’re at work, this will not be covered under your public liability insurance. In this way, if property of the insured party is damaged, it isn’t covered. Property damage belonging to a third party is covered. 


Personal injury 

In the event that the insured party is injured, this is not covered under a public liability policy. For example, if a sole trader is injured at work, this will not be covered by their insurer under their public liability policy. To avoid potential loss of income following an injury to the business owner, seek personal accident or injury cover. 


Deliberate harm

If the allegations are found to relate to deliberate harm, wilful acts of negligence or illegal behaviour, your public liability insurance will not cover the claim. If the damage was caused on purpose or due to illegal activities, it won’t be covered by your insurer. 


Punitive damages

In the event of the court awarding the third party punitive damages, these additional costs won’t be covered by the public liability policy. Likewise, taxes or fines associated with your business will not be covered by your insurer. 


Breach of contract

In most instances, liability arising from breach of contract will not be covered by a public liability policy. There may be situations of concurrent liability for contractual liability and civil liability which is covered – to be examined on a case by case basis. 


Some of the additional exclusions on your public liability insurance include damage or injury caused by:

  • Asbestos
  • Pollution
  • Faulty workmanship
  • Breach of professional duty
  • Loss of use
  • Libel and slander
  • Internet operations
  • Vehicles


How to best protect your business

The list of exclusions from public liability insurance may seem long, but there are so many unforeseen circumstances that it does cover you against. A public liability policy is one of the best ways to protect yourself and your business from any accidents or incidents that can happen with members of the public, or in a public place, in relation to your business activities. 


That being said, public liability insurance should not be the only form of business insurance you take out. To best protect your business from financial burdens and other risks, consider bundling other insurance policies, including:



The extent of exclusions to each public liability policy is dependent on the policy itself and the policy wording. Make sure you understand the terms of your policy and possible inclusions and exclusions to avoid any surprises if you need to claim. 

Our highly qualified team of insurance brokers are here to help. We pride ourselves on our professional service and personalised approach. Get in touch to find out more about public liability insurance exclusions and other business insurance policies to ensure your business is in the best position for success. Reach out to the team at GSK Insurance Brokers Perth to find out more.

July 30, 2018

By Graham Knight

Founder and Managing Director of GSK Insurance (established in 1981). Graham draws upon more than 50 years’ experience in the insurance industry, working in both insurance and broking across various private, public and government sectors in Australia.

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