Risk & Insurance
Does Public Liability Insurance Cover Employees?
Find out what the difference is between Public Liability and Worker’s Compensation

As a small business owner, you may already hold Public Liability Insurance (PL). However, if you took out your PL policy without taking the time to properly understand the cover, you might have made some incorrect assumptions about your insurance. Some small business owners think that PL also covers their employees if they’re injured as a result of their employment. However, PL does not provide any cover for injury to a business’s employees, even if they are injured due to the owner’s negligence.
This may instead be covered under Workers’ Compensation. Below, we take a look at PL Insurance and Workers’ Compensation closely, and find out the similarities and differences between the two. It’s also worth noting that Public Liability is usually sold bundled with Product Liability Insurance, so you may often see it referred to as “Public and Products Liability insurance” (PPL). 

What is Public Liability Insurance?

Public Liability insurance is designed to help cover you and your business if you’re held liable for personal injury or property damage to a third party in the course of your business activities. For example, if someone visits your business, slips over something, and injures themselves, they may sue your business if they believe it caused their injury. If this happens, you could find yourself faced with significant legal bills, as well as potential compensation. Public Liability is designed to protect your business from the financial impact of such events. It can help to cover both the legal fees in defending yourself, as well as compensation you might be required to pay. It is an important cover to hold if you interact with people in person as part of your business.

What does Public Liability Insurance not cover?

There are several events PL will not cover. In simplest terms, if your business is held responsible for a loss that does not involve injury or property damage, this loss will not be covered under your PL policy .
In addition, if you or your business knowingly and deliberately caused injury or damage to someone or their property, this will also not be covered under PL. Then, there are some events which are not covered under Public Liability because they are covered under other insurance policies. For example, if your business provides advice, or a service, PL will not cover allegations of professional negligence, where a client claims your advice or services caused them a financial loss. This may instead be covered under Professional Indemnity Insurance. In addition, as outlined above, PL will also not cover injury caused to your employees as a result of work they perform for you. This event would instead be covered under Workers’ Compensation.

What is Workers’ Compensation Insurance?

Workers’ Compensation Insurance is designed to cover your employees if they sustain an injury during their employment. It is designed to help cover their medical and rehabilitation costs, as well the employee’s lost income while they are unable to work due to the injury. In Australia, any business who employs people is legally required to hold Workers’ Compensation Insurance. Requirements vary between states and territories, so to find out the requirements in your state, ensure you check with the relevant authority.

How are Public Liability and Workers’ Compensation insurance similar?

The main similarity between Public Liability and Workers Compensation is that they both cover liability for personal injury. Under both policies, if a business is found to be liable for an injury, then these policies can help to cover the business’s costs in legal fees, as well as compensation.

What is the difference between Public Liability and Workers’ Compensation Insurance?

The biggest difference between PL and Workers’ Compensation is in who they cover. Workers’ Compensation will only cover workers (including contactors/sub-contractors in certain circumstances) and provides coverage if they sustain an injury during the course of their employment. PL, on the other hand is designed to cover injuries to third parties caused by your business activities or products. This can include your customers, visitors, or suppliers, but not employees. Another key difference between Workers’ Compensation and Public Liability is that only PL can cover property damage caused by a business’s acts or omissions. Under Worker’s Compensation, if an employee’s property is damaged in the course of their work, there is no cover provided.

Public Liability vs Workers Comp: What should you choose?

Both Public Liability and Workers’ Compensation are important covers to hold. Depending on the nature of your business, you might need just one, or both covers. Workers’ Compensation is a legal requirement for you to hold if your business has even one employee. It is, however, best to consult an employment lawyer to determine the legalities of the cover you need to hold. PL on the other hand is not necessarily required by law, however, this does not reduce the importance of it in any way. It is an equally important cover to hold, as claims of personal injury can occur at any time against any business owner. You may also be required to hold PL insurance under the terms of a lease or business contract. Speaking to an insurance broker can help you understand the two covers in more detail and help you to make a decision that is appropriate for your business’s circumstances.