Public liability (PL) insurance is probably the most common and important business insurances on the market. It covers you against legal and claim costs if someone experiences injury or property loss as a result of a service you provide. It also usually includes product liability cover, in case any item you manufacture or sell causes damage or loss.
So if someone trips on a cord in your shop, you’re covered. If you break a client’s vase during a home visit, you’re all good. And if someone cuts themselves on a defective unit you sold, public liability insurance will have your back.
In 2016/17, BizCover analysed over 16,000 policies sold to businesses that have 10 or less employees*. They found that, on average, public liability insurance cost $80.75 per month. 32% of small businesses paid less than $50 per month, while around 50% paid between $51 and $100.
Prices varied according to a number of factors, but these three had the biggest influence:
We then broke down the cost of public liability insurance by industry, and one of the clever millennials in our graphics team ran up this graph illustrating the results.
As you can see, the type of industry you’re in is a huge cost determinant. More risk means more premium, and vice versa.
Graphic: What public liability insurance costs
Retail and wholesale businesses involve more people and moving parts, so the probability of a claim is higher and the premiums reflect that. The potential for damage caused by the products they manufacture or sell is also a factor here. White collar gigs, on the other hand, are less likely to incur an injury or damage claim and they consequently pay lower premiums. Lucky them.
There are a couple of other interesting things to know. Smaller businesses with less staff will generally pay lower premiums than bigger teams, for example, which is great for the 60% of the country’s small businesses that operate as sole traders. Staff numbers, however, are more important for trade and service businesses than they are for white collar businesses, where revenue is more of a determinant.
Truth is, you won’t know exactly what public liability insurance costs until you get a quote and find out. But hopefully, we’ve given you a rough idea.
Ultimately, if the prospect of facing a huge lawsuit doesn’t take your fancy, purchasing a public liability policy might be the way to go. Paying for insurance may not be super fun, but the truth is that the alternative is even less enjoyable.
Michael Gottlieb is the founder of BizCover, a leading Australian small business insurance site.
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