Intuitive Insurance Articles

Public and Products Liability

According to the Australian Competition and Consumer Commission, in recent years the average size of a settled public liability claim has increased from $11,000 to almost $17,000. Congruently, there has been a stable increase in the number of public liability claims made. As such, the importance of Public and Products Liability for all business owners has grown substantially.

No business, industry or even sole trader is exempt from some degree of risk. Managing the risks inherent in your business is a responsibility that all owners have to third parties, which includes customers, employees, suppliers, and the community more broadly. When an accident occurs that is not reasonably foreseeable and causes damage to the property of another party, or causes injury to a person other than an employee (who is generally covered under workers compensation), the business may be found legally liable for the injury or damage.

Public Liability insurance is therefore vital for all businesses, as it provides protection for you, your employees, and members of the public, by covering any financial costs involved if a third party seeks compensation for your negligent actions.

Public Liability

Public liability is a term used to describe any liability to the public, that is, a third party to your business. Public Liability insurance protects you and your business against claims of personal injury or property damage that a third party suffers, or claims to have suffered, as a direct result of your business activities. Essentially, public liability provides protection against legal and court costs in the event that someone is injured, or has their property damaged while you are providing a service to them. For example, a customer slips on a liquid spill on your premises and suffers an injury as a result, or suffers an injury due to a falling object on your property.

Personal injury cover can include death, bodily injury, disease, disability, mental anguish, assault or battery, wrongful detention or imprisonment, malicious prosecution, and libel and slander, occurring during the period of insurance. Property damage cover includes the actual physical loss of or destruction of tangible property as well as the loss of use of tangible property that has not been physically damaged but cannot be used due to physical damage to other tangible property, which occurs during the period of insurance.

Products Liability

The term product liability applies a limit during the policy period for claims that are caused by a product of the business. Products liability is generally included in public liability policies and is essential if you sell, supply or deliver products to members of the public. Products liability will cover you for claims of bodily injury or property damage arising from the failure of goods sold or supplied through your practice. Loss or damage can include injuries, death or economic loss caused by damage to, or destruction of, another product, land, building or fixture; and what is considered a product will be defined in the policy wording, and usually includes anything manufactured, sold, distributed, resupplied or imported or exported by your business.

Having the correct product liability in place equips your business with the capacity to manage risks associated with design or manufacturing defects, insufficient labelling, and failure to provide adequate warnings or instructions. The following example illustrates a defectively manufactured product claim; if your company manufactures hot water bottles and one of your products bursts due to a manufacturing fault and injures your customer, product liability provides cover for this incident. In the case of failure-to-warn claims, a product must be hazardous in some way that is not obvious to the user or that requires the user to exercise certain precautions when using it. For example, a corrosive chemical is sold without adequate instructions for safe handling or use. However, in this instance, the injury must result from the failure to warn or properly instruct.

Public and Products liability is a specialist product and as such it is important to speak with an expert broker you can trust and who understands your business needs. If you would like more information, please drop us a comment, email, or call Intuitive on (02) 9493 6111. We’d love to hear from you!

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