What does Public Liability Insurance cover?

Public Liability insurance is the most commonly purchased insurance product amongst Kiwi small business owners. Public Liability insurance protects you and your business against the financial implications if you are found liable for loss or damage to other people’s property, or cause illness or injury that is not covered by the Accident Compensation Commission (ACC).
It is designed for all types of businesses, big or small, and is an important form of cover if your business deals with third-parties such as clients, suppliers or members of the public. Each Kiwi small business owner will pay a different amount per month or per year for their Public Liability insurance. This is because every small business is unique, functions under different circumstances, and has its own needs. Fortunately, you can customise your Public Liability insurance so that it covers you where you need it most, saving you money in the long run. Keep reading because we will explain excesses, limits, inclusions and exclusions below.

As a small business owner, we understand that you like to be prepared for the different things that life could throw at you. Like any good entrepreneur, you probably take every precaution to prevent accidents, illness, damage and mishaps in your office. Yet despite the best of intentions and the most watertight of policies, accidents can and do happen.
Think again.

Imagine the surprise of hearing a loud shriek outside your home office. Concerned, you walk outside to find one of your regular clients has fallen down your stairs and broken their ankle. Fixing the stairs which had a few missing tiles was on your to-do list but you hadn’t had a chance to get around to it…Your client could potentially make a public liability claim against you for their injury, including the associated medical expenses and any loss of earnings. If you didn’t have Public Liability insurance, you would be liable for all damages, and the debt could send your business under, forcing you to close your doors forever.

The harsh reality is that public liability claims can be very expensive (the example above could easily cost well over $50,000), and not having Public Liability insurance means you could well end up paying for the claim straight from your back pocket.

Did you know that Public Liability insurance is designed for all types of businesses, not just those who work in an office or have a fixed business premises?
Picture a landscaper busily working away beautifying a client’s backyard complete with a new retaining wall, leafy plants, and now courtesy of accidentally ‘cracking’ a water pipe while distracted, an unwanted water feature. No need for a flood of tears, Public Liability will likely have your back by providing cover* for damage caused to third-party property when things don’t go exactly to plan.
Take the time to consider the overwhelming impact a Public Liability claim could have on your business, not only financially but to its reputation.
The key things Public Liability Insurance is designed to provide cover for include:

• Any award or settlement of compensation to a third party due to them sustaining personal injury or property damage due to your negligent business activities
• Costs awarded to the claimant if they bring a court case against you as a result
• Your defence costs, including legal expenses incurred in assessing or defending a claim

Did you know that most Public Liability policies also extend to Product Liability cover? If you sell, supply or deliver goods, even in the form of repair or service, you could consider taking out cover for claims made against you where goods have caused damage or injury. Product Liability insurance covers you if any of these events happen to another business or person by the failure of your product or the product you are selling.
Product Liability cover applies both to products that you have manufactured, and also to products that you sell that have been manufactured by a third party.

Excesses, Limits, and other factors affecting how much your Public Liability insurance will cost:
The cost for Public Liability insurance will vary for small businesses around New Zealand. This is because each small business will provide a unique service, operating under unqiue conditions, and may require unique clauses to be included on their insurance, covering situations that could arise for their business.

You can also choose what excess you want to pay. This is the amount you will have to pay out of pocket for a claim before your insurance kicks in and picks up the rest of the tab. Often your excess will be $250-$1000. Having a larger excess will mean that your insurance will cost you less each month or year. However, it also means that should the worst happen, you will end up paying more out of pocket.
Your limit is how much your insurer is willing to pay out per incident. You can choose an amount in the tens of thousands, hundreds of thousands, or millions. A smaller amount will be cheaper month to month, but a larger amount will protect you against more situations.

Note:
You should make sure that any other businesses that you deal with also hold Public liability insurance. This could save you from headaches down the line should an accident occur on their end due to negligence.