Public and products liability insurance is often bundled into a single policy, but the two covers protect against different risks. Understanding both is essential if your business deals with the public or makes, imports, sells or distributes products.
Public Liability: Risks From Your Activities
Public liability responds when your business activities cause injury to someone or damage to their property. It is about what you do, for example a customer tripping over a power cord in your shop or a contractor damaging a client’s property during a job.
Products Liability: Risks From What You Sell
Products liability responds when a product you manufacture, supply, sell or import causes injury or property damage. It is about the goods you put into the market. Examples include:
- A faulty electrical appliance you sell causes a house fire
- A food product you make causes illness
- A piece of furniture you import collapses and injures someone
Importers Carry Extra Risk
Under Australian Consumer Law, if an overseas manufacturer has no presence in Australia, the local importer can be treated as the manufacturer for liability purposes. That means importers may be held responsible for defects they had no part in creating. If you import goods, make sure your insurer knows the countries you source from and the types of products involved.
Who Needs Public and Products Liability?
- Retailers and wholesalers
- Manufacturers and importers
- Food producers, cafes and restaurants
- Online stores and e-commerce businesses
- Trades and service businesses that supply materials as part of their work
Key Policy Features to Check
- Limit of indemnity: Commonly $5 million, $10 million or $20 million. Products liability is often on an aggregate basis, meaning the limit applies to all claims in the policy period combined.
- Territorial limits: Are exports, especially to the USA or Canada, covered?
- Product recall: Generally excluded. Separate product recall cover may be needed.
- Professional advice exclusions: Advice-related claims usually fall under professional indemnity.
- Contractual liability: Liability you accept under a contract may not be covered unless it would exist anyway at law.
Reducing Your Liability Risk
- Source products from reputable suppliers with quality control processes.
- Keep records of product batches, suppliers and testing.
- Provide clear instructions and warning labels.
- Have a documented process for handling customer complaints.
Protect Your Business
Gidda Insurance Brokers helps retailers, manufacturers, importers and service businesses structure public and products liability cover that suits their operations. Read our guide on how much public liability you need, see our services, or get in touch on 0491 999 555.
This article contains general information only and does not take into account your objectives, financial situation or needs. Before making a decision, consider whether the cover is appropriate for you and read the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD). Gidda Insurance Brokers Pty Ltd is an Authorised Representative (No. 001307383) of Regis Licensing Pty Ltd ABN 71 130 820 727, AFSL 338156.
