Regardless of the industry you operate in, as an Australian business owner, you must effectively navigate operational and legal risks daily. From workplace incidents to defective products, no company is immune.

Both public and product liability insurance cover claims made by third parties; that means customers, suppliers, or even someone just walking past your site. But they cover different types of risks. Therefore, understanding those differences could be the thing that saves your business from serious financial strain.

Navigating Business Risks in Australia

Australia’s business environment is full of opportunity, but it’s also full of regulations and compliance requirements. A single accident, a customer tripping over a loose cord in your store, a faulty component in a machine you’ve sold, or a contractor being injured on-site, can quickly lead to expensive claims. 

A couple of key stats that highlight the influence of liability insurance for Australian businesses include:

• Australia has around 86 million general insurance policies in force, underscoring just how common and essential insurance is for managing business risks. 
• The general liability insurance market is growing, with gross written premiums expected to reach US$7.05 billion by the end of 2025. This is largely due to businesses becoming more aware of liability risks. 
• Liability insurance premiums are becoming more competitive, with many policies experiencing flat or reduced renewal costs. However, businesses with a history of adverse claims may still face higher premiums.

Hence, liability insurance isn’t a luxury. It’s part of the foundation that keeps your operation secure when the unexpected happens. The trick is knowing what kind of protection you actually need.

What Is Public Liability Insurance?

Public liability insurance covers your business when someone else suffers injury or property damage because of your work. It’s there to handle the legal and compensation costs if, say, a customer slips on a wet floor, or a contractor gets hurt because of your equipment.

It applies to incidents that happen in public areas, from your worksite, your office, a client’s premises, or anywhere you’re operating. Most public liability policies in Australia cover:

• Injury to a third party caused by your business activities.
• Damage to someone else’s property due to your operations.
• Legal costs if someone decides to sue.

It doesn’t matter whether the incident is your fault or not; what matters is that it happened in connection with your business. If you run a restaurant, it’s the customer who burns themselves on spilled coffee. If you’re a tradie, it’s a neighbour’s fence that gets damaged when the skip bin’s delivered. Without public liability cover, even a minor claim can rack up thousands in legal and repair costs.

What Is Product Liability Insurance?

On the other hand, product liability insurance is all about protecting your business from claims related to the products you make, sell, or supply.

If a product you’ve provided causes injury, illness, or property damage, you can be held responsible, even if you didn’t manufacture it yourself. In Australia, the law says that anyone in the supply chain can be liable. That means wholesalers, importers, retailers, and distributors all share some of the risk. Some examples include:

• A power tool you’ve sold malfunctions and injures a customer.
• A batch of food products you’ve distributed causes food poisoning.
• A children’s toy breaks apart, creating a choking hazard.

The point is, once your product leaves your hands, you can’t control what happens to it, but you can control how well you’re protected.

Key Differences Between Public and Product Liability Insurance

At a glance, both policies deal with claims made by others against your business. However, think of them like this: public liability covers incidents that happen around your business, and product liability covers incidents that occur after your products leave your hands.

• Public liability applies when something goes wrong during the course of your work, for example, a client slips on-site or you accidentally damage a wall during a fit-out.
• Product liability applies when a product you’ve made or supplied causes harm or damage at a later stage.

In many industries, especially construction, manufacturing, or retail, both policies overlap. You might not even notice where one stops and the other starts, and that’s exactly why most insurers bundle them together.

Do You Need Both? Assessing Your Business Needs

Most of the time, yes. Most Australian businesses should have both. 

If you deal directly with the public, customers walking through your doors, tradies visiting job sites, delivery drivers dropping off stock, public liability is a must. If you sell, manufacture, or distribute any kind of product, even if it’s a small part or accessory, you’ll need product liability too.

Here’s the thing: liability claims don’t just target big corporations. They hit small businesses the hardest. Hence, the cost of these policies is minimal compared to what you stand to lose if something goes wrong.

How Morgan Insurance Brokers Can Help 

At Morgan Insurance Brokers, we work with businesses across Australia to identify the exact risks they face, whether that’s heavy machinery on-site, product distribution, or client interactions, and tailor coverage that fits their needs. 

Our team takes the time to gain a thorough understanding of your daily operations, the services you provide, and the products you handle. If you are uncertain whether your current insurance offers comprehensive coverage, or if you are beginning to evaluate your options, we encourage you to contact us today. 

Because in business, smart coverage today keeps you running tomorrow.