As a small business owner, you can do everything in your power to keep staff and customers safe, but accidents do happen.

Someone falls on site or slips in the aisle. A customer gets sick after eating your famous burrito. A contractor hurts themselves unloading a van of heavy materials. Or an employee accidentally starts a fire in your client’s warehouse.

A lot of errant things can – and unfortunately do – happen.

“The incidents may not even be your fault, but they occur across all industries, affecting people and property, and costing Australian businesses millions of dollars each year,” says Eleanor Debelle, Managing Director, Consumer at QBE Insurance. “Liability claims can be amongst the most expensive, particularly if it involves personal injury.”

A 2019 QBE survey revealed that if faced with a liability claim, the majority of small businesses would likely run up large personal debts to pay the claim. One-third admitted to simply not knowing where the money would come from or being unable to finance legal costs.

This isn’t surprising when you consider how costly personal liability claims can be, especially when you factor in medical costs and damages. “It’s not unusual for even a small business to take out an indemnity limit of up to $20 million to cover such a loss,” says Debelle.

That’s not a drop in the ocean. To best protect yourself from the unexpected, it takes some considered forward planning.

Here are four pointers that will help you get your ducks in a row.

1. Understand your business needs

When you run a business, there are so many things that can go wrong and rack up the kind of costs that make your knees shake.

“Some common liability incidents that can impact your business are faulty workmanship; accidental damage to the property of others; water damage; vehicle damage; and what we call slip, trip and fall injuries,” Debelle tells Kochie’s Business Builders.

Two key questions you should ask yourself are:

  • Is there the potential for a third party to bring legal action against my business?
  • Could I survive the financial fallout of legal action brought against me by a third party?

The fact is, even if you think you’re taking every possible precaution, every business is at risk of needing to defend a liability claim. Another fact: despite running a successful and profitable business, without an insurance safety net few businesses can survive being sued for millions.

2. Understand your insurance need

Once you’ve determined that liability insurance is a necessary expense, there are generally two types of cover you should consider:

  • Professional indemnity. This protects you against claims of negligence or breach of duty arising from services or advice you provide.
  • General liability. This protects you if you accidentally cause someone else a loss or injury to person or property in the course of running your business. So if someone trips, falls or hurts themselves on your premises, or you damage someone else’s property while on the job, general liability insurance can cover the costs arising from a claim. General liability also covers property damage and claims for stolen ideas, invasion of privacy, defamation and other ‘advertising liability’ issues.

Public and product liability can sometimes be split into separate policies, but are usually covered together under general liability insurance. It’s also important to note that public liability insurance is compulsory in some instances. For example, in some states you need it to get a builder, plumber or electrician license. You may also need to show a public liability insurance policy before you can enter certain work sites or third party premises, such as hospitals or other government premises.

Public liability insurance considerations

Public liability insurance is compulsory in some instances. Image: Adobe Stock

3. Check with an expert if your cover is right for you

Liability insurance isn’t something you want to wing. You need to make sure you are correctly insured with the right amount of the right cover to manage the unique risks of your business. Even if your business is small, your risks can be complex and you’ll need to be certain that any insurance policy you take out adequately covers your business as it changes or grows.

“The amount of public liability insurance cover depends on business size and industry, because ultimately, these factors affect a company’s level of risk,” notes Debelle.

Some of the areas an expert can help you understand include:

  • Having an online presence as well as a physical one
  • Staff working from home as well as on site
  • Supply chain or delivery challenges that may interrupt your business
  • Ensuring you have the right cover to meet legal requirements as your business evolves

You can start getting to know your business insurance needs here. To be certain your needs are covered, talk to an insurance broker or agent who specialises in your industry and business size.

4. Budget for your premiums

It’s all well and good to know what cover you should have for your business, but you also should budget for your annual premium amounts. To keep your safety net ready to catch you, ensure you can pay the premium amount when it’s due, plus any excess not covered by your policy at any given time. A higher excess should decrease your premium cost, but remember you will still need to cover that amount in the event of a claim.

The better you can tailor your insurance policy to your business, the more you’ll save on your premiums. That way you’ll only be paying for insurance you need. Be sure to contact a broker or agent as mentioned above to see what works best for you.

Another way to save is by paying your premiums annually instead of monthly. You can also reduce your premiums by paying online or bundling all of your business insurance needs together with one provider.

For more information, speak to a broker or visit QBE’s Small Business Insurance page.

This article is brought to you by Kochie’s Business Builders in association with QBE Insurance.

The advice in this article is general in nature and has been prepared without taking into account your objectives, financial situation or needs. You must decide whether or not it is appropriate, in light of your own circumstances, to act on this advice. You should ensure you obtain and consider the Policy Wording or Product Disclosure Statement and Target Market Determination for the policy before you make any decision to buy it. For more information, visit

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Could your small business survive a liability claim?