3 Reasons Why Your Small Business May Need Public Liability Insurance

When you’re looking at insurance for your business, you’ll be reviewing a mix of both compulsory and optional policies.  For example, if your business is located in Western Australia, you are required to have Workers Compensation cover if you have employees.  

Whilst you don't have to have Public Liability insurance in WA, you should seriously consider taking out a policy if your business involves any kind of interaction with the public.

Why is this a good idea?

1. You can't protect yourself from every accident

As a responsible business owner, you don't plan on being negligent.  You understand that you have a duty of care to keep things safe for anyone who visits your office, retail shop or workplace.  

However, things don't always go according to plan.  You can't predict everything that might ever go wrong, and you may not be able to fix a problem quickly enough to prevent an accident from happening.

For example, if you run a retail business, you’ll know that a liquid spill is a slip hazard.  You know that you must clean up the spill and make the floor safe.  If someone slips, falls and injures themselves, they may take legal action against you.

However, in the few moments it may take you to fetch cleaning equipment and get back to the floor to clean up the spill, a customer may slip and fall.  The fact that you were in the process of removing the hazard won't make you any less responsible for the accident.

Public Liability insurance doesn't remove your safety obligations, however, it does protect you financially if someone has an accident which was your fault.

2. You might not be able to afford a compensation claim

Finances are often tight when you run a small business.  You may have cash reserves you can use in emergencies, but you probably won't have a lot of spare cash floating around.

Unforeseen accidents could put your finances under a lot of strain.  For example, if you run a small computer repair shop and you accidentally drop a customer's expensive laptop, you'll have to cover the costs.

While these basic property replacement costs may not be high, your costs rise rapidly if a third party is injured because of your negligence.  You may be liable for medical costs, damages and compensation.

If the case goes to court, you'll have to pay legal fees.  As well as paying general administrative fees and costs, you may have to hire both a solicitor and a barrister.  Plus, if you lose the case, you may be ordered to pay some or all of the other person's legal costs.

If you have Public Liability cover, then your insurer would cover these costs.  As well as protecting you against potentially high expenses, insurance policies can also help you out with smaller liability problems such as third-party property loss or damage.

3. You may need liability coverage to do business

The main aim of Public Liability insurance is to protect yourself against the consequences of third-party injury or property damage.  However, you may also need to put this coverage in place to be able to do business in certain circumstances.

For example, tradies may need Public Liability insurance before they can work on certain construction sites.  Shopping centres may require retail stores to have a certain amount of liability coverage in place before they can rent space.