Public liability insurance

Just about every type of general insurance includes a public liability - what does this mean, and do they overlap?

Many names

Public liability insurance can go by many names: builders' liability, construction liability, public liability, public & products liability, general liability, commercial general liability, broad form liability, advertising liability, property owner liability, tenant liability, just to name a few of the more common ones.

With a few modifications and optional inclusions, they're pretty much all the same thing - covering the risk of having to pay compensation for personal injury or property damage.

Scope

The difference between all of the different types of public liability is the scope of cover. For example, motor vehicle liability (which is a type of public liability) covers the risk in personal injury or property damage in relation to the use of a motor vehicle as a motor vehicle.

Home insurance public liability covers the risk of personal injury or property damage in relation to your occupancy or ownership of a home. Even though your home insurance includes public liability, it wouldn't be expected to cover motor vehicle liability (that's what car insurance is for!) or for owner builder risks (not being a standard "occupancy or ownership of a home" type exposure).

Owner-builder public liability

Leading on, owner builder public liability covers the risk of personal injury or property damage arising from being an owner builder. So an example would be a passer-by being hit by debris from the work-site, or a contractor suing the owner-builder for injury sustained under the owner builder's supervision and care.

Property damage examples could be a fire spreading from the owner builder's site and burning the neighbour's house, or even (and this has happened multiple times!) the owner-builder accidentally driving a skid steer loader through the fence and into someone's car.

It's all about fault ...

The most important thing to remember is that public liability insurance is always defensive - it pays to defend the owner-builder against allegations of wrongdoing. If the accident isn't your fault, there's no compensation to pay. So your public liability will defend you but absolutely won't give anyone money they don't deserve. If it's not your fault, neither you nor your insurer would pay the other person.

... because it's about being sued

A common misconception is that as long as someone "has insurance", there's nothing to worry about. That could simply not be further from the truth. Yes, your tradesmen should have their own public liability insurance to protect themselves; but their insurances do absolutely nothing for you as the builder. If you are sued for injury or damage (even if that injury or damage were 100% caused by the tradesmen), you need your own insurance to protect yourself. Your tradesman's insurance protects him - it does not protect you as well.

Public liability insurance requirement

That's why owner builders absolutely absolutely absolutely need their own public liability insurance. Even if you're not planning to physically work on your own project, ultimately you are the builder, and you're practically guaranteed to be dragged into any claim for injury or damage. Remember, as the builder, the buck stops with you. Even if you're completely blameless, you need expert legal advice (and money to foot the bill!) to defend yourself in any claim.

Table of Contents

What does insurable interest mean?

Uberrima Fides

Estimating project cost

Avoid common pitfalls and traps

Public liability insurance

Claim advice

Abbreviations and acronyms for owner builders

Comparing apples and oranges and grapefruit

Selling an owner-built home

Choose your builder carefully

Fire doesn't burn metal or does it