What Is Public Liability Insurance?

Public liability insurance covers your business if a third party (a customer, supplier, or member of the public) claims they were injured or their property was damaged because of your business activities. It may help cover the legal defence costs and any compensation awarded, subject to policy terms.

It does not cover you or your employees. It covers other people affected by what your business does.

Most public liability policies also include product liability. If you sell, supply, or deliver goods and a product you provided causes injury or damage, the product liability section of your policy may respond.

Public liability insurance is one of the most common types of business insurance in Australia. It is not legally required for every business, but many leases, contracts, councils, and platforms require it before you can operate.

What Does Public Liability Insurance Cover?

Public liability cover insurance typically responds to four categories of claims.

Third-party bodily injury

If someone is injured because of your business activities, PL may help cover the claim. This includes a client slipping on a wet floor in your premises, a member of the public tripping over your equipment at a market stall, or a customer reacting to a product used during a treatment.

Third-party property damage

If your business activities damage someone else's property, PL may help cover the claim. This includes a tradesperson accidentally drilling through a water pipe in a client's home, a cleaner using the wrong chemical on a marble benchtop, or a delivery driver reversing into a client's fence.

Advertising injury

Some PL policies cover claims of advertising injury. This includes unintentional copyright infringement, defamation, or misleading statements made in your marketing materials. If a competitor claims your advertising unfairly damages their reputation, the advertising injury section of your policy may respond.

Legal and defence costs

PL may help cover the cost of defending a claim, including lawyer fees, court costs, and expert witness fees. Legal costs can exceed the compensation itself, particularly if a claim is disputed over months or years.

All covers are subject to the terms, conditions, limits, and exclusions in the relevant policy wording and PDS.

How Does a Public Liability Claim Work?

If a third party is injured or their property is damaged because of your business activities, they (or their lawyer) issue a letter of demand to your business. You notify your insurer. The insurer assesses the claim, arranges legal representation on your behalf, and manages the defence. If your business is found liable, the insurer pays the compensation and legal costs up to your policy limit, subject to policy terms. You pay the excess. The insurer handles the rest.

What Does Public Liability Insurance NOT Cover?

PL is not a catch-all. Common exclusions include:

• Injury to you or your employees (that is workers' compensation, not PL)
• Damage to your own property or equipment
• Faulty workmanship or the cost of redoing your own work
• Professional negligence or errors in advice (that is professional indemnity, not PL)
• Contractual liability you have agreed to accept
• Claims from events before or after your policy period
• Asbestos-related claims
• Pollution and contamination (unless specifically covered)
• Deliberate, reckless, or illegal acts

Always check the Product Disclosure Statement (PDS) for the full list of exclusions on your specific policy.

Do You Need Public Liability Insurance?

When it is legally required

In some industries, PL is mandatory by law. For example, electricians in Queensland must hold public liability insurance to be licensed under the Electrical Safety Regulation 2013 (QLD). Some states require builders and certain trades to hold PL as a condition of their licence.

When it is practically required

For most businesses, PL is not legally mandatory but practically unavoidable:

• Commercial leases: Most landlords require $10 million or $20 million PL before signing a lease. This applies across NSW, VIC, QLD, and other states.
• Head contractors and procurement portals: Corporate compliance platforms like Cm3 and Felix block vendors without a valid Certificate of Currency at the required level.
• Platforms: Hipages, Airtasker, and ServiceSeeking require verified PL for premium contractor profiles.
• Councils and event permits: Market stalls, pop-up shops, and public events typically require a minimum of $10 million or $20 million PL.
• Client contracts: Many commercial clients and government tenders specify a minimum PL level before they will engage you.

If you interact with customers, visit client premises, or operate from a commercial space, you are likely to need PL at some point. For a breakdown by profession, see our guide to who needs public liability insurance.

If you sell or import physical products (including through an online store), note that under the Australian Consumer Law (ACL), an importer of goods assumes full product liability if the product causes injury or damage. The product liability section of your PL policy may respond to these claims. E-commerce sellers who import and resell physical goods carry more exposure than many realise.

Public Liability Insurance in NSW

If your business operates in New South Wales, PL functions the same way as in other states but there are a few NSW-specific considerations:

• Stamp duty: NSW applies approximately 9-11% stamp duty on insurance premiums. This is added to your premium at checkout. Small businesses with aggregated turnover under $2 million may qualify for a stamp duty exemption.
• Lease requirements: Most NSW commercial leases require $10 million or $20 million PL as a standard condition.
• NSW Fair Trading: Certain licensed trades in NSW must hold PL to maintain their contractor licence under the Home Building Act 1989.

The cover itself does not change by state. What changes is the stamp duty rate and any state-specific licensing rules.

Real Claims Examples

These are illustrative scenarios based on common claim patterns in the Australian market.

A tradesperson damages a client's property: A handyman is mounting a TV bracket and accidentally drills through a concealed water pipe. Water floods the room, damaging timber flooring, electronics, and plasterwork. The client claims $28,000 in property restoration. Public liability insurance may respond to claims for accidental third-party property damage, subject to policy terms.

A customer is injured at a business premises: A client visiting a graphic design studio trips on an uneven doorway threshold and fractures their foot. They claim $75,000 in compensation for medical costs, lost income, and pain and suffering. The insurer covers the compensation and $30,000 in defence costs. Public liability insurance may respond to claims for accidental third-party bodily injury, subject to policy terms.

A beauty professional causes a treatment reaction: After a waxing treatment, a client develops burns requiring medical treatment. The client claims approximately $8,000 in damages. Public liability insurance may respond to claims arising from accidental injury during service delivery, subject to policy terms.

Illustrative scenarios only. Coverage depends on the terms of the individual policy.

PL vs PI vs Workers' Compensation: What Is the Difference?

These three policies cover different things. They are not interchangeable.

PL does not cover your employees. That is workers' comp. PL does not cover financial loss from bad advice. That is PI. Many businesses need all three.

For more on PI, see upcover's guide on what is professional indemnity insurance.

What about a business pack?

A public liability policy only covers third-party claims. It does not protect your own property, equipment, or stock. A business pack bundles PL with covers like contents, equipment, glass, business interruption, and theft into one policy. If you need to protect both third parties and your own business assets, a pack is usually more cost-effective than buying each cover separately. Check more on PL vs Business Pack.

How Much Does Public Liability Insurance Cost?

PL costs depend on your occupation, turnover, cover level, and location.

• $5 million cover: $400 to $700/yr. This is the entry-level tier suited to low-risk sole traders, consultants, and home-based businesses with minimal foot traffic or physical exposure.
• $10 million cover: $600 to $1,500/yr. The most common level for trades, retail, and service providers and often the minimum required by landlords, head contractors, and commercial leases.
• $20 million cover: $1,500 to $5,000+/yr. Required for commercial construction, government contracts, and industrial sites where a single incident could involve multiple injured parties or high-value property damage.

Low-risk sole traders (consultants, freelancers) sit at the lower end. Trades, food businesses, and construction sit higher. Business insurance premiums are generally tax-deductible to the extent they relate to earning assessable business income. Confirm your specific treatment with a registered tax agent.

Not sure which level? See our guide to choosing the right PL cover level. and for a full cost breakdown, see upcover's guide on how much does business insurance cost.

How upcover Arranges Public Liability Insurance

upcover is a digital-first insurance broker helping Australian businesses arrange public liability insurance without the paperwork or phone queues. upcover arranges PL across 1,000+ occupations with access to 80+ insurance partners. A Certificate of Currency is issued instantly on policy confirmation.

• 70,000+ businesses covered across Australia.
• 4.9/5 customer rating.
• No long forms.

upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

Get a quote through upcover's public and products liability insurance page.

FAQ

What is public liability insurance?

Public liability insurance covers your business against claims from third parties (customers, suppliers, members of the public) who are injured or have their property damaged as a result of your business activities. It may help cover legal defence costs and compensation, subject to policy terms.

Is public liability insurance mandatory in Australia?

It is not legally required for every business. However, some industries (like electricians in QLD) must hold PL by law. Beyond legal requirements, most commercial leases, head contractors, councils, and platforms require PL before they will engage your business.

What does public liability insurance not cover?

PL does not cover injury to you or your employees, damage to your own property, faulty workmanship, professional negligence, contractual liability, or deliberate acts. Employee injuries are covered by workers' compensation. Professional errors are covered by professional indemnity insurance.

What is the difference between public liability and professional indemnity?

Public liability covers physical injury and property damage caused by your business activities. Professional indemnity covers financial loss caused by your negligent advice or professional service errors. A tradesperson who damages a client's wall needs PL. A consultant whose advice costs a client money needs PI.

How much does public liability insurance cost in Australia?

PL typically costs between $400 and $700 per year for $5 million cover, $600 to $1,500 for $10 million, and $1,500 to $5,000+ for $20 million. Costs vary by occupation, turnover, and location.

Do sole traders need public liability insurance?

There is no general law requiring all sole traders to hold PL. However, most commercial clients, landlords, platforms, and councils require a valid Certificate of Currency before engaging a sole trader. PL is practically required for most sole traders who interact with clients or work on other people's premises.

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_{The information in this article is general in nature and provided for informational purposes only. It does not constitute personal legal or insurance advice. Legislative references (including the Electrical Safety Regulation 2013 (QLD) and the Home Building Act 1989 (NSW)) are based on publicly available information currently at the time of writing and may change. Always confirm specific requirements with your state regulator or a qualified professional. All insurance products arranged through upcover are subject to the terms, conditions, limits and exclusions contained in the relevant policy wording and Product Disclosure Statement. Before deciding whether a particular insurance product is right for you, please read the relevant PDS and consider your personal circumstances. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}