Public liability and workers compensation respond to injuries to different people: third parties such as customers, and your own workers. Many businesses with staff hold public liability and workers comp together.
Public liability insurance is designed to cover claims if someone is injured or their property is damaged in connection with your business. Workers compensation insurance is designed to pay benefits to your workers if they are injured or become ill because of their work. Workers compensation is set by state and territory schemes, so the rules on who counts as a worker differ by location.
Cover depends on the policy and insurer you choose. Check the policy wording and its terms and conditions for what is and isn't included.
How do public liability vs workers compensation compare?
Public liability and workers compensation differ on who they are designed for, who sets the rules and whether a law requires them.
| Question |
Public liability insurance |
Workers compensation insurance |
| Who it is designed for |
Third parties, such as customers, visitors and members of the public |
Your workers, including employees and some contractors a scheme treats as workers |
| What it may respond to |
Claims for injury or property damage connected with your business |
Benefits for a work-related injury or illness, such as some wages and medical costs |
| Who sets the terms |
The insurer's policy wording |
State or territory workers compensation laws |
| Is it a legal requirement? |
Not a general legal requirement, but contracts, councils and venues may ask for it |
Required where workers fall within the relevant state or territory scheme |
| Who issues the policy |
Insurers, often arranged through a broker |
A government scheme insurer or an approved insurer, depending on the state or territory |
| Your own injury as the owner |
Generally outside cover, as public liability is designed for third party claims |
Sole traders are generally not covered for themselves |
Swipe left or right to see the full table.
What is public liability insurance?
Public liability insurance is designed to respond to third party claims for injury or property damage, for example a customer slipping in your shop. It may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms.
Public liability is commonly sold with products liability insurance. Products liability is designed to cover claims for injury or damage caused by a product you made, sold or supplied, once it has left your hands. Together they are called public and products liability.
Public liability insurance is generally occurrence-based. The policy in force when the incident happened responds, even if the claim arrives later. The guide to public liability insurance explains the cover in more detail.
What is workers compensation insurance?
Workers compensation insurance is designed to pay benefits if a worker is injured or becomes ill because of work. According to Safe Work Australia, payments can cover some wages while a worker recovers, plus medical, hospital and rehabilitation costs.
Workers compensation is required where workers fall within the relevant state or territory scheme. Safe Work Australia says employers must have insurance to cover their workers under Australian law. There are 11 main schemes, and each one is governed by different laws.
The guide to workers compensation insurance explains how benefits and claims work.
When does a business need public liability and workers compensation?
A business commonly holds public liability and workers compensation together once it employs staff and deals with the public. The two covers respond to different people, so one does not stand in for the other.
Common situations where both apply
- A café employs staff and serves customers on its premises.
- A trades business takes on an apprentice and works in clients' homes.
- A cleaning business sends employees to commercial sites.
- A retail shop has casual staff and customers walking through the door.
If a customer slips in your shop, public liability insurance may respond. If a staff member slips while serving that customer, the claim generally falls under workers compensation.
When contracts ask for evidence of both
Many clients, builders and head contractors ask for evidence of cover before work starts. A certificate of currency is a document from the insurer that confirms a policy is in place. Contracts may ask for a certificate for public liability and, where you employ workers, for workers compensation.
When public liability may be the main cover
For a sole trader with no employees, public liability is often the cover a client or contract asks for. The public liability guide for sole traders explains common requirements.
Who counts as a worker for workers compensation?
Who counts as a worker differs by state and territory. Each scheme has its own definition of a worker and its own list of people it treats as workers, called deemed workers.
Workers compensation rules by state and territory
The table shows who issues policies and when a policy is generally needed, according to each regulator or scheme.
| State or territory |
Who issues workers compensation policies |
When a policy is generally needed |
| New South Wales |
icare is the contact for taking out a policy |
Employers, unless exempt: annual wages of $7,500 or less, no apprentice or trainee and not part of a group |
| Victoria |
WorkSafe Victoria, with its agents helping employers register |
Employers of workers in Victoria, unless remuneration is $7,500 or less in a financial year and there are no apprentices |
| Queensland |
WorkCover Queensland or a self-insurer |
Queensland-based employers who employ workers |
| South Australia |
ReturnToWorkSA |
Employers of workers based in South Australia, unless total payments to workers are under $16,806 for 2026-27 |
| Western Australia |
Insurers approved by WorkCover WA |
Employers, as a legal requirement under the WA scheme |
| Tasmania |
A licensed insurer, or the employer holds a self-insurance permit |
Employers, under section 97(1) of the Tasmanian Act |
| Northern Territory |
Insurers approved by NT WorkSafe |
Employers, who obtain a compulsory policy from an approved insurer |
| Australian Capital Territory |
An approved insurer |
Employers, with a current policy covering their workers in the ACT, including Pty Ltd companies with one or more workers |
Swipe left or right to see the full table.
Thresholds and rules can change. The workers compensation compulsory guide explains how to get cover in each state.
What is a deemed worker?
A deemed worker is someone a scheme treats as a worker even though they may not be an employee. Safe Work Australia's comparison of deemed worker definitions shows how each scheme differs. Examples include labour hire workers, outworkers and some contractors.
- New South Wales: some contractors are deemed workers, and SIRA has a worker or contractor tool to help classify them.
- Victoria: deemed workers include owner drivers, outworkers and some contractors, according to the Safe Work Australia comparison.
- Queensland: an ABN does not settle whether someone is a worker. WorkCover Queensland's worker tests include a contractor working outside their own trade or business.
- Tasmania: a contractor doing work over $100 outside their regular trade may be taken to be a worker. That rule does not apply where the contractor holds their own personal accident insurance, according to the WorkSafe Tasmania guide.
- Australian Capital Territory: a contractor who works on a regular and systematic basis is deemed to be a worker, according to WorkSafe ACT.
Are contractors and subcontractors covered?
Contractors and subcontractors may or may not be your workers for workers compensation, depending on the scheme and the working arrangement. business.gov.au says a contractor running their own business may need their own insurance. It also suggests checking with your state or territory regulator when you engage a contractor.
Tax and super classification is a separate test. The ATO says you are responsible for classifying your worker for tax and super purposes.
Do sole traders need workers compensation?
Sole traders are generally not covered by workers compensation for their own injuries. business.gov.au says that if you're a sole trader, workers compensation insurance doesn't cover you.
The state rules follow the same pattern. In New South Wales, icare says sole traders and partners cannot take out a policy to cover themselves. In Victoria, a sole trader who does not employ other workers does not need to register, according to WorkSafe Victoria.
A sole trader who hires staff generally needs workers compensation for those workers under their state or territory scheme. A sole trader engaged by another business may also count as that business's worker or deemed worker, depending on the arrangement.
Personal accident and sickness insurance for sole traders
Personal accident and sickness insurance is designed to help protect your income if injury or illness stops you working. It may pay a weekly benefit, subject to the policy terms. business.gov.au notes that sole traders can take out accident and sickness insurance through a private insurer.
Personal accident and sickness insurance is voluntary and is not a substitute for workers compensation where a scheme applies. The comparison of group personal accident and workers compensation explains how they differ.
What does public liability insurance not cover?
Public liability insurance is designed to respond to third party claims, so some losses sit with other covers. Exclusions commonly include, but are not limited to:
- injury to your own workers, which generally sits with workers compensation
- your own injury as the business owner
- injury or damage arising from the use of registered motor vehicles
- claims arising from professional advice or services you provide for a fee. These generally sit with professional indemnity insurance, designed to cover claims that your advice, service or work caused a client financial loss
- dishonest, fraudulent or wilful acts by you (dishonesty by an employee may sit under a fidelity or crime section, where a policy includes one)
- the cost of redoing or fixing your own faulty work
Important: This list is not exhaustive. Exclusions vary between insurers. Always refer to the policy wording and its terms and conditions for the exclusions that apply to you.
What workers compensation pays, and to whom, is set by each scheme's legislation rather than a private policy wording. Your state or territory regulator in the table above explains the benefits that apply.
How upcover can help
upcover arranges public and products liability insurance for Australian businesses, including sole traders and employers. upcover works with 80+ insurance partners and can arrange quotes from a range of insurers.
In states and territories where employers can choose an approved or licensed insurer, upcover may also be able to help with workers compensation insurance. An upcover representative or a broker can talk through the options for your business.
- 70,000+ businesses covered
- 4.9/5 customer rating
- Certificate of currency available once your policy is confirmed
You can request a public liability insurance quote online.
Frequently asked questions
Does public liability insurance cover employees?
Public liability insurance commonly excludes injury to your own workers. Injuries to employees generally fall under workers compensation, which is set by each state and territory scheme. Public liability is designed for claims by third parties, such as customers and visitors.
Do employers need public liability and workers compensation?
Workers compensation is required where your workers fall within your state or territory scheme. Public liability insurance is not a general legal requirement, but clients, contracts and venues may ask for it. Many employers who deal with the public hold public liability and workers compensation together.
Can a sole trader get workers compensation for themselves?
A sole trader generally cannot claim workers compensation for their own injuries, according to business.gov.au. Some sole traders arrange personal accident and sickness insurance instead, which is designed to help protect income if injury or illness stops them working.
Is a subcontractor covered by my workers compensation?
A subcontractor may count as your worker or deemed worker, depending on your state or territory scheme and the working arrangement. Some regulators, such as SIRA in New South Wales, publish tools to help classify workers.
Is public liability insurance compulsory in Australia?
Public liability insurance is not a general legal requirement for businesses in Australia, but councils, venues, landlords and contracts may set their own insurance conditions. Some licences also set minimum requirements. For example, WorkSafe Queensland says electrical contractors need public and products liability of at least $5 million as a licence condition.
How much does workers compensation insurance cost?
Workers compensation cost depends on your state or territory scheme, your industry and the wages you pay. The guide to workers compensation insurance cost explains the factors in more detail.
The information in this article is general information only and does not take into account your objectives, financial situation or needs. Workers compensation rules are set by each state and territory scheme and can change, so check with your regulator for current requirements. Before deciding whether a product is right for you, read the policy wording and its terms and conditions. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.
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