Public liability insurance—essentials

The following Insurance & Reinsurance practice note provides comprehensive and up to date legal information covering:

  • Public liability insurance—essentials
  • Public liability insurance
  • The insured
  • Professional business
  • Damage and injury
  • Damage and loss
  • Preventing damage
  • Injury
  • Period of insurance
  • Costs

Public liability insurance—essentials

Public liability insurance

Public liability insurance is a form of liability insurance that indemnifies a policyholder’s liability in respect of personal injury, death or damage to third party property, as well as the claimant’s costs and defence costs.

A typical insuring clause (also known as the operative clause) will read:

The insurer will indemnify the insured against their liability to pay damages, including claimant’s costs and expenses, and defence costs, arising out of the insured’s professional business for personal injury and/or loss or damage occurring during the policy period.

Public liability insurance is often sold in conjunction with employer’s liability, which covers injury and illness suffered by employees, as opposed to third parties. Unlike employer’s liability insurance, there is not a statutory requirement to carry public liability insurance. For more information about employer’s liability, see Practice Note: Employers’ liability insurance essentials.

An insured’s right to recover under a liability policy arises when its liability has been ascertained. It is not necessary for there to be a court judgment (although this will be persuasive), however the onus is on the insured to show there was a legal liability to the third party.

The policy is unlikely to insure special damages, commercial relationships, ie payments made by the insured as a goodwill gestures or due to commercial pressure. Damages may be defined in the policy as monetary compensation capable of

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