Sole Trader’s Guide | Understanding Public Liability Insurance

You’re living the dream many only ever think about. Running your own business as a sole trader means you’ve reached a great level of freedom and independence – but as with any freedom and liberty, it comes with great responsibility and duty.

Keeping your business safe and protected is a never-ending game, and if you have the right steps in place, you can breathe easy, knowing your business won’t trip, fall, and break.

In this guide, we run through the most important aspects you’ll need to consider as a sole trader and how you can find the best type of insurance for your business.

Public Liability Insurance Briefly Explained

No matter the occupation your business is in – bookkeeping, tradies, holiday accommodation, instructors, etc – you’ll need to have safeguards in place that protect your business from malfunctions, damages, and injuries.

Public Liability Insurance has been designed to protect your business if a customer, supplier, or member of the public is injured or suffers property damage as a result of your negligent business activities.

Public Liability policies can also extend to cover Product Liability and Defective Workmanship.

Most insurance claims made against a company are by their customers, and almost every company in the world has customer interaction on a daily basis – if you or your employees interact with other people while doing business in any way, Public Liability insurance should be highlighted on your to-do list.

All sole traders have a legal responsibility to ensure the safety of their customers, suppliers, the community, and their property.

Even the most careful company is always at risk of injuring someone or damaging something during the course of their operations.  If there is a chance that the financial impact of paying a claim and associated legal fees could potentially put you out of business, you probably need Public Liability insurance.

What Does Public Liability Insurance typically cover in an insurance policy?

It is always recommended to read the fine print of every policy you purchase and understand the wording and terms of use. The inclusions and exclusions of any insurance type will vary from insurer to insurer, and it’s advised to always carefully read through all the details.

A list of the most common inclusions for Public Liability insurance policies:

  • Injury to any person
  • Obstruction, loss of amenities, trespass, nuisance, or interference with any right of way, light, air, or water
  • All sums that the insured is legally liable to pay, due to any claim that is first made against the insured during the insurance period, in respect of bodily injury, death or loss of, or damage to property
  • Damage to third party property as a result of the spread of fire from the insured property
  • Movement of motor vehicles – Liability arising in connection with moving a motor vehicle for the continuation of the business
  • Security firms
  • Cross liability

A list of what is commonly excluded in Public Liability insurance policies:

  • Professional services
  • Efficacy
  • Recall
  • Advertising
  • Retroactive date (if you didn’t previously have public liability cover)
  • Deliberate acts
  • Defective design

Why Sole Traders may need to consider getting Public Liability Insurance

Aside from the net of protection Public Liability insurance offers, there are also certain cases that require sole traders to have some form of Public Liability insurance in place. These cases include:

  • In the event of rental agreements, you often need to have a minimum level of Public Liability insurance before renting your business premises.
  • To become a member of certain professional boards and organisations, it may be a requirement.
  • Certain contract work requires sole traders to have at least a minimum level of Public Liability insurance in place.

Cases Where Sole Traders Will need Public Liability insurance

There are many differences that would dictate whether you, as sole trader, would need Public Liability insurance.

Here, we’ve briefly listed out a few examples of wehn sole traders will need Public Liability insurance.

Remote / Home-Based Work

Despite the advantages of running your company from home, you are still exposed to risks and accidents if clients or suppliers are ever injured or sustain property damage.

The risks of client injury, property damage or any other accident sustained by a client, supplier, or member of the public will create a significant impact if you are uninsured and have no protection.

Public Liability insurance will protect you from all those risks, even if you are a home-based business. Always be prepared for the worst, as most claims made against businesses are made by the customer.

Operating a Mobile / Online Business

Online business operations have boomed over the past few years, with more and more businesses developing their operation to include an online option.

Public liability insurance can provide the basic cover your business may need – because online businesses are exposed to risk, just like your brick-and-mortar store.

Operating a Market Stall

Stall holders will often need to have Public Liability insurance in place before they are able to sell their goods and wares. It is also preferable to check if you will need extended coverage for Product Liability if you are selling any products at your stall.

Product Liability Insurance Briefly Explained

Product Liability insurance is important to consider if your business sells any products (sold, supplied, re-supplied, distributed, imported or exported, manufactured, constructed, erected, assembled, installed, grown, extracted, produced, processed, treated, altered, modified, repaired, serviced, bottled, labelled, handled) that have been sold by you.

Product Liability insurance will protect from any claims made by third-parties who have sustained personal injury or property damage caused by products sold or supplied by you.

What to consider when purchasing Public Liability insurance as a sole trader

Public Liability insurance policies are available from many insurers on the market and they offer and cover different aspects.

We’ve briefly listed out a few important points to ask yourself when trying to work out the best way to insure your business.

Are my business activities fully covered?

The very last thing a business owner wants to face is a claim that is not covered under their insurance – knowing the right policy would have saved you from the financial explosion.

Always check with your insurer and understand all the details and wording of your policy.

Does my cover include all my business activities?

After making sure you have the right type of insurance set up, you’ll want to ensure you have adequate cover that will fully encompass all your business activities. This is where you calculate the amount of cover you need based on numerous occupational facts.

Do I have a Risk Management plan in place?

One of the many tasks you face as running a sole trader business is assessing all the possible risks your company may face and implementing a risk management strategy to minimise the risks your business constantly faces.

We’ve made a list of a few important factors that are beneficial to keep in mind when developing your risk management plan:

  • If an unfortunate incident were to occur, have a plan in action in place for you and your employees.
  • Safety equipment, such as fire-alarms, sprinklers, and CCTV cameras can vastly improve the safety of your business.
  • Regularly check your business premises for potential risks each day. This could include overgrown trees, lack of wet-floor signage, loose pavers, or any other type of hazard. Remember, most claims made against business owners are by their customers.

Finalising your Public Liability insurance as a sole trader

The final step after assessing all your business practices and potential risks, is to sort out your Public Liability insurance.

Our digital journey makes insurance brokerage simple by creating an efficient digital-first solution for buying insurance.

You can get instant online quotes available 24/7 – for purchasing insurance, making changes to your policy, or getting documents. Our website is mobile friendly, so you can even add cover while on the move. At Bi-Me, We’re fiercely committed to the small business community, whether it’s to get a better deal or to assist with a claim. One of our core values is ‘no policy is too small for us’ and we’ll go the extra mile for everyone.