Like a crime-fighting duo, you’ll often see the terms Public Liability and Products Liability pop up in your search for business insurance cover. The similarity of both terms can be confusing, and you may have wondered whether you need both for your business. Fret not, we have prepared this article specifically to help clarify and explain what Public Liability and Products Liability are about, and how they matter to your business.

If you had previously purchased a business pack policy, you may already be covered for Public and Products Liability. If you want to be sure, you could look at the Product Disclosure Statement that you would have received at the time a quote was presented to you.

Side note: It is very normal for insurance companies to issue a general PDS that covers their full business package. For example, you might have only signed up for Public Liability, but the PDS might also detail Management Liability, Cyber Protection, Machinery Breakdown, and so on. Just remember, you may not necessarily be covered for every item listed in the PDS. Speak to your broker if you need to clarify.

Ok, back to the topic!

Public Liability vs Products Liability

To better understand the differences between Public Liability and Products Liability, let’s take a closer look at the two policies:

Public Liability

A Public Liability claim can be made against you by anyone who has experienced a compromise in their safety or wellbeing after an encounter with your business, directly or indirectly. Public Liability insurance provides coverage for property damage and personal injury to a third-party member e.g. your supplier, customer, or the general public in the event of an accident or injury resulting from negligence in performing your business activities. However, this does not cover accidents or injury caused by the goods sold or provided by your business.

Here are several scenarios where Public Liability insurance would come in handy:

  1. You run a small café. A staff member delivering a cup of coffee trips and accidentally empties the hot content on a customer. The customer suffers from first degree burns and requires medical attention for the wound.
  2. You are a tradesman who is contracted to work on a client’s home. During the job, you accidentally drop your tools on the client’s marble flooring causing a crack over a large surface area. The cost to replace the damaged floor totals to over $15,000.
  3. Your warehouse catches fire and the neighbouring businesses cannot operate due to the extent of the damage. To make matters worse, all paid goods that were meant to be shipped to customers were also destroyed in the fire.


Products Liability

If your business involves supplying or distributing products around Australia, then Products Liability insurance is something you should seriously consider if you haven’t already. Products Liability protects your business against claims by third parties relating to property damage or personal injury from using your products. It also covers any compensation payable to a third party and your defence fees should the case escalate to court. It is also important to remember that even if you only import the goods to distribute in Australia, you will still be held responsible for the damages caused to your consumers.

Below are example situations where Products Liability insurance would apply:

  1. You manufacture hot water bags and several of the hot water bags burst due to a manufacturing fault, injuring your customers.
  2. You manufacture flour and supply to a major supermarket chain. A batch of the flour becomes contaminated and unsafe for consumption unbeknownst to the retailer. The flour was purchased many times by shoppers before your business eventually recalls that particular batch. Shoppers who have consumed the flour then become extremely unwell.
  3. You import scooters from the USA for distribution in Australia. Customers have written in complaining about a faulty braking system with some even suffering from injuries because of it. As the manufacturer is not an Australian business, you will be held responsible for these claims under the Australian Consumer Law Act.

So, do I need Public & Products Liability?

In a nutshell, yes you might, depending on the nature of your business. In Australia, some policies include both whilst others are only covering you for Public Liability. For most businesses, it’s important to have both so that you are covered whether the responsibility lies with your business activities or products.

Don’t worry, if you find yourself unsure about your current cover or whether you should include Products Liability in your current plan, the team at EWIB are here to help! We are a friendly bunch of very experienced brokers who specialise in insurance for small to medium sized businesses across Australia. Get in touch with us using the contact bar below and let us help you take care of business!

1800 809 132
hello@ewib.com.au | www.ewib.com.au

Important Note: All insurance policies have exclusions. Please refer to the Product Disclosure Statement or Policy Wording to decide whether an insurance policy meets your needs.

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