Public liability insurance is a type of business protection that covers the cost of claims made in relation to your business activities. It’s designed to protect your business in the event of damage to property or injury to a person due to your actions at work. The associated legal costs of third party allegations can be challenging for a small business or sole trader to cover, not to mention the repairs, replacements and other costs required if found liable.


Who should have Public Liability insurance?

There are many benefits as a sole trader. For example, you get to make all the decisions and retain all the profits. However, this also means that you are liable should something go wrong. Public liability cover isn’t mandatory for sole traders, but it’s definitely recommended.


This insurance cover offers peace of mind to sole traders, knowing you are protected should something happen – whether that’s an accident, injury, or damage to property. In addition, some clients prefer to see proof of liability cover before using your service. Some employment contracts require liability cover, too.


How does Public Liability Insurance work?

If someone brings forward allegations against you in relation to your business activities, your insurance provider will cover the legal fees associated with the allegations, and any damages up to the amount stipulated in your policy.


For example, if a customer slips and falls on a wet floor at your place of business, you may be liable to pay for their medical bills. In this event, you would file a claim with your insurance provider, and your public liability policy would keep you from having to pay the funds from your own pocket.


What does Public Liability Insurance cover?

Public liability insurance covers claims related to a third party suffering an injury or loss in relation to your business activities. These include:


  • Legal expenses: The costs associated with legal action and defending your business can be astronomical. These costs are covered under your liability cover.
  • Bodily injury: Such as the example given above, where a client slipped and was injured. If a customer or client suffers an injury at your place of business (even if your place of business is your home), these damages are covered under public liability insurance.
  • Property damage: This covers damage to a third party’s property. If the property of a customer or client is damaged in relation to your business or work, this is covered by public liability insurance.


Why is Public Liability Insurance so important for sole traders?

As the person calling all the shots in a sole tradership, all liability falls to you. This means that any financial loss or burdens (such as expensive legal fees or compensation costs) also falls to you. Allegations made against a sole trader can be financially crippling, and can seriously impact your ability to continue trading. Sole trader public liability insurance offers financial support so that you are covered should something happen.


No matter how careful you are, accidents do happen. It can be easy to think “it’ll never happen to me,” but all it takes is a small slip up or accident and you could find yourself liable.


Rather than thinking and hoping that it will never happen, enjoy the peace of mind knowing you are supported in the event that something does happen.


Other forms of cover for sole traders

It’s undeniable that public liability insurance is an essential form of cover for sole traders. However, it doesn’t completely cover every aspect of your business. You should consider bundling various business insurance policies in order to be fully covered and supported financially as a sole trader. Other sole trader insurance policies to consider include:


  • Workers’ compensation: If you employ workers, workers’ compensation insurance is a legal requirement in Australia. This will cover employees wages if they are unfit to work following injury at work, and the cost of their medical treatment and medication.
  • Professional indemnity insurance: This covers you against allegations made regarding negligence or incorrect professional advice leading to injury or loss.
  • Personal injury or accident: These policies offer peace of mind to sole traders that would otherwise suffer following a sickness or injury which interferes with their ability to do their job. It can cover loss of income, assistance to return to work and financial protection against accidents resulting in injury, death or disablement.
  • Motor vehicle: Some sole traders rely on their vehicle in order to continue their business. This type of insurance can get you back on the road quickly following the loss or theft of your vehicle, or to cover damages caused to a third party’s vehicle.


Here at GSK Insurance Brokers we can help you find the right insurance bundle for your business. To find out more about the recommended types of insurance for sole traders, get in touch with our expert team at GSK Insurance Brokers Perth today.

March 21, 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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