One of the most common questions business owners ask when arranging insurance is:
“How much public liability insurance do I actually need?”
The answer isn’t always straightforward.
Some businesses carry $5 million public liability cover, others require $10 million, and many larger contracts now demand $20 million or more.
Choosing the right level of public liability insurance isn’t just about meeting a requirement. It’s about protecting your business from potentially devastating claims that could arise from a single accident.
So how do you know which limit is right for your business?
Let’s break it down.
What Is
Public Liability Insurance?
Public liability insurance protects your business if a third party suffers:
- Personal injury
- Property damage
- Financial loss resulting from property damage or injury
and alleges that your business was responsible.
The policy can help cover:
- Legal defence costs
- Settlements
- Compensation payments
- Court-awarded damages
For many businesses, public liability insurance is one of the most important forms of protection they can have.
Why Public Liability
Limits Matter
Many business owners focus on whether they have public liability insurance.
The more important question is:
Do you have enough?
A serious injury claim can quickly exceed hundreds of thousands of dollars once you factor in:
- Medical expenses
- Rehabilitation costs
- Loss of income
- Legal fees
- Ongoing care requirements
In some cases, claims can reach millions of dollars.
This is why selecting the right limit is critical.
What Does $5 Million
Public Liability Cover Mean?
A $5 million policy provides up to $5 million in protection for covered liability claims.
For some lower-risk businesses, this may be sufficient.
Examples may include:
- Sole traders
- Home-based businesses
- Small consultants
- Some low-risk service providers
However, many commercial clients and contractors now require higher limits regardless of the risk profile.
When $5 Million
May Not Be Enough
Even relatively small incidents can become expensive.
Imagine:
- A customer suffers a serious injury at your premises
- A contractor damages critical infrastructure
- A fire spreads and causes extensive third-party property damage
The total cost of defending and settling a claim can escalate rapidly.
In today’s environment, many businesses are finding that $5 million is no longer the default option it once was.
Why $10 Million Public Liability
Cover Is So Common
For many Australian businesses, $10 million public liability insurance has become the standard level of cover.
It’s commonly required by:
- Builders
- Commercial landlords
- Property managers
- Shopping centres
- Government departments
- Corporate clients
Many businesses choose $10 million because it provides a stronger level of protection while still remaining cost-effective.
Industries Commonly Carrying
$10 Million Cover
Examples include:
- Electricians
- Plumbers
- Carpenters
- Landscapers
- Retail stores
- Cafés and restaurants
- Cleaning businesses
- Trades and contractors
For many businesses, $10 million strikes a balance between affordability and protection.
When Do You Need $20 Million
Public Liability Cover?
In recent years, $20 million public liability cover has become increasingly common.
This is particularly true for businesses working on:
- Large construction projects
- Government contracts
- Infrastructure projects
- High-traffic public environments
- Commercial developments
Many principal contractors now require subcontractors to hold $20 million public liability insurance before they can commence work.
Why Larger Clients
Require $20 Million
From their perspective, it’s about risk management.
If a major incident occurs, they want confidence that:
- Adequate insurance exists
- The contractor can respond financially
- Liability claims won’t expose the project to additional risk
For larger organisations, $20 million is often viewed as the minimum acceptable standard.
The Hidden Cost of Choosing
the Wrong Limit
Many business owners choose a limit based solely on price.
But the difference in premium between:
- $5 million
- $10 million
- $20 million
is often far smaller than people expect.
In many cases, increasing your liability limit may only represent a modest increase in annual premium compared to the protection it provides.
The real cost isn’t carrying too much cover.
The real cost is discovering you don’t have enough when a serious claim occurs.
Your Contracts May Determine
Your Cover Requirements
One of the biggest mistakes we see is businesses arranging cover without considering their contracts.
Many agreements specifically require:
- $10 million public liability insurance
- $20 million public liability insurance
- Evidence via a Certificate of Currency
If your policy doesn’t meet these requirements, you may:
- Lose work opportunities
- Be unable to access sites
- Breach contractual obligations
- Delay project commencement
Before selecting a limit, always consider the contracts you’re signing.
Questions to Ask
Before Choosing a Liability Limit
When determining the right level of cover, consider:
Where Do You Work?
Businesses operating in public spaces generally face higher exposure than those working from private offices.
How Many People Interact With Your Business?
The greater the foot traffic, the greater the potential liability exposure.
What Would a Serious Claim Look Like?
Consider the worst-case scenario rather than the most likely scenario.
What Do Your Clients Require?
Your insurance should satisfy both your risk profile and your contractual obligations.
Are You Planning to Grow?
Many businesses outgrow their insurance before they realise it.
Choosing a higher limit today may save you from having to restructure your insurance tomorrow.
Bigger Doesn’t Always
Mean Better
While higher limits provide greater protection, every business is different.
The right answer depends on:
- Your industry
- Your clients
- Your contractual requirements
- Your risk exposure
- Your growth plans
The goal isn’t to buy the biggest policy available.
The goal is to carry the right amount of protection for your business.
Common Public Liability
Insurance Myths
“I’m a Small Business, So I Only Need $5 Million”
Not necessarily.
Some small businesses work in environments where clients require $20 million regardless of turnover.
“Nothing Has Ever Happened Before”
Most liability claims are unexpected.
Insurance exists because accidents don’t come with warning signs.
“The Cheapest Option Is Fine”
The cheapest option can become expensive if it limits your ability to win work or leaves you exposed after a claim.
Not Sure Which Liability
Limit You Need?
If you’re unsure whether $5 million, $10 million or $20 million is appropriate, you’re not alone.
Many business owners don’t review their liability limits until:
- A client requests higher cover
- A contract requires it
- A broker identifies a gap
- A claim occurs
By then, the stakes can be much higher.
Public Liability Insurance Australia:
Getting the Right Cover
At Bunker Insurance, we help businesses understand not only what public liability insurance does, but how much protection they actually need.
We work with:
- Tradies and contractors
- Construction businesses
- Hospitality operators
- Retail businesses
- Professional service providers
- Transport operators
Our goal is to ensure your insurance aligns with your risks, contracts, and future growth plans.
Talk to a Broker
Before You Choose
The right public liability limit isn’t always obvious.
But getting it wrong can be costly.
Speak with a Bunker Insurance advisor today and we’ll help you determine whether $5 million, $10 million or $20 million public liability cover is right for your business.
