What is public liability insurance and why do I need it?


Public Liability Insurance is essential for business owners, so it’s automatically included in all AAMI Business Insurance package policies.

Whether a customer’s injured in your place of business or you and employee accidently damage someone else’s property while working on a job, Public Liability Insurance can cover your business when you might need it most.

How does Public Liability Insurance work?

Public Liability Insurance helps businesses cover third party injury or loss.

If a member of the public – someone not employed by your business – is injured, suffers some sort of loss or has their property damaged as a result of your business activities, Public Liability Insurance helps cover related costs. These related costs can run into the thousands, even hundreds of thousands of dollars. This kind of loss has the potential to cripple some small businesses. Public Liability Insurance can help those impacted receive fair compensation while businesses keep operating. Some possible scenarios might include:

  • a customer slips on a wet floor in your shop
  • you fall through the ceiling of a customer’s home during an installation
  • you’re working on a big project and a tradie from another business trips over your tools, or
  • there’s damage to the commercial space you lease.

What does Public Liability Insurance cover?

Specific inclusions can differ depending on your particular policy. It’s important to be aware of what your policy covers – and what it doesn’t.

If you currently have AAMI Business Insurance in place, or you’re thinking about it, you can check your cover by reading the Product Disclosure Statement (PDS).

Here’s a few examples of things Public Liability Insurance may cover:

  • loss or damage to property belonging to someone else - such as the ceiling in a house where you’re working
  • legal costs associated with the settlement or defence of a claim.

Limits, conditions and exclusions apply – so make sure to read the PDS for full details.


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What doesn’t Public Liability Insurance cover?

  • Worker’s Compensation for personal injuries to you or your employees.
  • Damage to your own property. But if Public Liability Insurance is just one part of your Business Insurance package, you may have – or be able to include – cover for this.
  • Injury, loss or damage caused by professional negligence or illegal activities.
  • Loss or damage caused by cyber incidents and cyber acts.
  • Any liability caused by asbestos, regardless of the form or quantity.
  • Faulty workmanship, including costs to rectify.  

What about my employees?

Public Liability Insurance covers your business for claims made by the general public. It doesn’t cover work-related injuries or illness incurred by you or your workers.

Worker’s Compensation Insurance covers that kind of thing and is compulsory for every Australian employer. AAMI doesn’t offer Workers Compensation Insurance, but GIO does in some states and territories.


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Why do I need Public Liability insurance?

When running a business, you’re responsible for any member of the public coming into contact with it – customers, suppliers or anyone else. If an accident happens or damage occurs, those affected could make a claim against your business.

This means potential costly legal fees and payment for the damage or injury – which is why Public Liability insurance is so important.

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Insurance is issued by AAI Limited ABN 48 005 297 807 trading as AAMI Business Insurance. Limits, conditions and exclusions apply. Read the relevant Product Disclosure Statement before buying this insurance. The Target Market Determination is also available.

This advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it.