As a business owner you probably had your fair share of ups and downs. Unfortunately, no matter how much you plan, things can still go wrong.  This is why businesses must consider Public and Products Liability Insurance as a bare minimum. This is the case no matter what the industry – retail, manufacturing, importing, construction or professional services. Yes, even consultants should carry Liability Insurance to protect them from any damage that may occur in connection with their business.

Public Liability Insurance (often referred to as Legal Liability or Third Party Liability) protects you from costly litigation following an allegation of negligence involving your company’s product, staff or business activities which contributed to an injury or caused damage to property of a third party.
Products Liability Insurance generally goes hand in hand with Public Liability, and represents an important feature. It provides protection for liability associated to the sale of products. Current laws in Australia generally deem the importer of a product responsible where the manufacturer isn't locally represented, even though you didn’t manufacture, alter or otherwise modify the product.
As a general rule, a $10 million liability limit is viewed as the “normal” limit in Australia. Anything less is deemed to be inadequate and may leave your personal assets exposed if you are sued by third parties. The difference in price between $5 million and $10 million cover is, in many cases, less than 20%, so is well worth the extra investment.  Courts take into account the extent of property damage and impact on the life of the injured party when determining a final payout figure.  So consider a fire in your building started by a staff member making lunch, it proceeds to burn down several neighbouring businesses – courts establish negligence as the appliance responsible had not been tagged and approved. Will $5 million be sufficient to cover damages and legal defence costs?

It is recommended that when setting your sum insured that you consider your contractual obligations, customer size/exposure. A typical professional services business has trip and fall exposures for any guests that attend their premises and product liability responsibilities for any food and drink supplied. Whereas a large manufacturing outfit may have greater liabilities to a retailer who distributes their product in the event a customer is injured or has their property damaged.  In this case, the manufacturer may have agreed under contract to protect the retailer in such circumstances e.g. pay for any legal costs it incurs in defending any claim, or pay daily damages until the case is finalised.  Such commercial obligations can often fall outside the scope of an insurance policy as insurers are only looking to cover claims their insured is responsible for at law – whereas a contract will attempt to capture everything. 

An astute insurance adviser will assist in reviewing any agreement prior to execution and highlight any areas of weakness relative to their client’s policy.  It is always accompanied by a recommendation to also have a lawyer look at it.

Disclaimer – “This material contains general information only and may not suit your particular circumstances. To decide if a policy is right for you please carefully read the relevant Product Disclosure Statement (PDS) and/or Policy wording. While we have exercised due care and skill in preparing this information, Optimum Insurance Services (Optimum) does not accept any legal responsibility or liability for negligence or otherwise to you or anyone else who seeks to rely on this information. This includes, without limitation, loss arising from a possible failure of the information to comply with statutory or regulatory requirements or the failure of the information to identify other terms and conditions beyond those considered in this document. You should obtain advice to ensure that your policy provides adequate cover for your circumstances.

“Optimum Insurance Services Pty Ltd is a Corporate Authorised Representative of Insurance Advisernet Australia Pty Ltd (Car No. 291220), Australian Financial Services Licence No 240549, ABN 15 003 886 687.”

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Optimum Insurance Services Pty Ltd is a Corporate Authorised Representative (No. 291220) of Insurance Advisernet Australia Pty Ltd (AFSL No. 240549).


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