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What level of public liability cover does my business require?
It’s a common question asked by many business owners every day. In this guide we’ll take a look at the levels available and how much you might need.
Levels of Cover
Although it can vary from one insurer to the next, there are three main levels of public liability insurance available in Australia.
The main three levels are as follows:
- $5 million
- $10 million
- $20 million
There are some companies who also offer a $15 million policy, whilst another insurer (QBE) offers a huge $50 million worth of cover.
How Much Do I Need?
The amount of cover you require will vary depending on the needs of your business.
Whilst a small home based business may be quite safe with a $5 million policy, a large business with more substantial risks may require cover of $20 million or more.
Often the amount of cover you require will be dictated by the contracts you enter into.
If your business is doing any work within shopping centres you will often find that the contract stipulates public liability of at least $20 million. The same is true of many government contracts.
The amount of cover required may also be set as part of the conditions of obtaining certain business and trade licenses.
For example electrical contractors will need a minimum of $5 million public liability cover in order to obtain their licence in most states.
Impact on Premiums
As with most forms of business insurance, the higher the level of cover required, the higher the premiums will be.
Thankfully the premiums do not increase directly in line with the sum insured, so tripling your cover from $5 million to $15 million will certainly not result in a tripling of the cost.
Whilst increasing the level of cover will increase the public liability cost, it is always more important to ensure that you have the right amount of cover in place for your business needs.
As you have probably picked up from this article, there is no magic number for how much insurance coverage you should have in place.
If the level of cover you require is not stipulated in any of your contracts or licence conditions, the next best option is to speak with a qualified insurance broker who can assess you needs.