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Many business owners are familiar with the term public liability, but what about broadform liability?
Is this yet another form of insurance that a business has to pay their hard earned money for?
Thankfully the answer is generally no.
What’s in a name?
What most people refer to as a public liability policy is generally the same as a broadform liability policy.
Broadform liability simply refers to an insurance policy which covers public liability as well as product liability.
In Australia, virtually all public liability policies include product liability, and can therefore be classed as broadform liability.
Are all public liability policies broadform?
If you have a business pack policy from any of the major insurance companies, your liability cover is most likely broadform.
To check this simply refer to the Product Disclosure Statement, ask your insurance broker or contact the insurer directly.
Not all policies work this way however, especially if you have more of a specialised policy for your business.
This type of policy is known as standalone public liability, and is generally only used in quite specific situations.
If your policy makes no mention of broadform or products liability, you check with your broker to see if it is a standalone public liability policy.
What’s the difference between public liability and product liability?
Public liability insurance covers you for property damage or personal injury suffered by a third party where you are deemed to be responsible.
In some ways you could say that it is more about the physical actions (or consequences) of your business activities.
Product liability on the other hand covers damage or injury caused by the products you provide to your clients.
As an example let’s say an electrician installed a new power point in a home, and a week later the home suffered serious fire damage.
If the investigation showed that the power point was faulty and caused the fire, then it is the product liability that would provide cover.
This is because the electrician has done nothing wrong himself, and it was the product that was at fault.
If the investigation showed that the power point has been installed incorrectly and this caused the fire, then the products liability would cover him.
This is because the fire was caused by the electrician not installing the power point correctly.
This is why broadform liability insurance is so important, as it ensures you are still covered regardless of whether it was you or your products at fault.
And that basically answers the original question of what is broadform liability – it is basically an insurance policy that covers losses caused by your physical work as well as your products.
So do I need public liability or broadform liability?
In most cases it is broadform liability that you need, but keep in mind that most people (even insurance brokers) will still just refer to it as public liability.
Think of it this way – if your policy includes public liability as well as product liability, well then you have yourself broadform liability insurance.
As always if you still have any questions simply contact your insurance broker.