Emergencies don’t usually provide much warning before they arrive. One minute your demolition contract is progressing smoothly and on schedule. The next, you’re facing accusations of damage or personal injury.
Without insurance, these incidents can quickly turn ugly. But not every policy is designed to address the unique risks that your industry faces. For this reason, many demolition firms are turning to highly specialised – and often expensive – coverage. One policy you’ll see everyone vouching for is product and public liability insurance.
Is it worth it? Or does it make companies feel safer without providing any real value? This article will answer that question, along with a few more:
- What is public liability and product insurance?
- What does it cover?
- What should you consider when signing up?
- Is it mandatory for Australian demolition firms?
What is Public and Product Liability Insurance?
To answer this question, we must first explore two other common policies:
Public Liability Insurance
This form of insurance protects you against claims from third parties (i.e. neighbouring property owners and other members of the public) that your work has caused undue duress. Some examples of covered incidents include personal injury and property damage.
Product Liability Insurance
Product liability policies are designed to cover injury or damage caused by a product that you manufacture, supply, sell, or otherwise distribute. This may include structures that you built or altered, or tangible products that you offer.
Historically, these have always been two separate policies. But that has changed in recent years. Many insurers now bundle public liability and product liability insurance together, creating a comprehensive policy that addresses both risk factors at once. This frankenstein policy is what we call “Public and product liability insurance”.
What Does Public and Product Liability Insurance Cover?
Generally speaking, product and public liability insurance covers:
Third-party Personal Injury
Incidents where an individual not associated with your company is injured by ongoing demolition work. For example:
- A member of the public trips over site signage, temporary fencing, or materials.
- A client is injured during a site walk-through.
- Parts of a demolished structure fall, hurting a bystander.
It is important to note that worksite injuries would not fall under public liability, but instead workers’ compensation.
Third-Party Property Damage
Damage to other properties not associated with the current demolition project. For example:
- Dust, vibration, or impact damage to a neighbouring property during demolition.
- Damage to a client’s existing structure during a strip-out.
- Accidental damage caused during rubbish and debris removal.
Product-Related Injury or Damage
Harm caused to property or persons by a product that you distribute, manufacture, or endorse. For example:
- You supply a component, fixture, or temporary structure and it fails.
- You distribute a product used on-site that later causes damage.
Legal Fees
In some cases, a public and product liability insurance policy may cover legal fees incurred as a result of claims made against you. Given the high cost of a court case, this is often one of the most valuable inclusions.
Why Demolition Firms Need Public and Product Liability Insurance in Australia
Insurance is often seen as nice to have, but optional. Unfortunately, this can be a very expensive misconception. There are several reasons you should not attempt to operate without product and public liability insurance in Australia:
Legal Requirements
First and perhaps most compellingly, a public liability policy is required by law in NSW, VIC, QLD, and NT. Failure to maintain the correct insurance could result in harsh fines, or even cost your license. Since this policy is typically bundled with product liability anyway, there’s no harm in obtaining both.
Risk Reduction
Demolition is an extremely high-risk field. The work environment changes quickly, multiple parties are involved, dangerous situations are par for the course, and the public is often very close by. Accidents are very likely, and when they do occur, the level of financial hardship incurred will directly relate to how prepared you are.
Reputational Protection
The more insurance you have, the more professional your company appears to be. Over time, this builds up your reputation with both current and future clients. Trust is earned faster, and relationships become stronger – all with less effort on your part.
Financial Preservation
Liability claims cost money. Either you pay the short-term legal fees and reparations, or the long-term reputational damage and reduced profitability that comes with it. Insurance saves you from both of these, ultimately improving your chances of long-term success.
Applying for Public and Product Liability Insurance
Applying for public and product liability insurance is a relatively straightforward process:
1. Gather Key Business Information
Before beginning, ensure you have all important documentation ready to go:
- ABN, business structure, and years trading
- Estimated annual turnover (and projected turnover if you’re growing)
- Number of staff and whether you use subcontractors
- Claims history (if any) for the last 3–5 years
If the insurer has to ask for any of this later, it could slow down the application process.
2. Clearly Outline What You Do
Next, you’ll need to explain your business activities in detail. This step is one of the most important, as insurers will assess your application (and price your premiums) based on your risk level. Be specific about:
- The types of jobs you take on (e.g., demolition, strip-outs, asbestos removal, excavation, rubbish removal)
- Where you work (metro, regional, remote)
- Whether you work on high-risk sites (tight access, occupied premises, near public areas, near sensitive infrastructure)
- Any specialist services you provide (e.g., asbestos handling/transport/disposal)
3. Confirm Your Desired Coverage Limit
The limit is the maximum amount your insurer will cover. Before committing to a certain policy, check that the limit is high enough for your needs. To do this, perform a risk analysis:
- Identify every emergency your business could face, and categorise them in order of most likely - least likely
- Determine the damage each incident would cause
- Calculate the potential financial cost of this damage
Then, you only need to compare the numbers.
4. Review Inclusions and Exclusions
After verifying that the limit covers your needs, review the inclusions and exclusions. These are the events and costs that the insurer will/will not cover, respectively. Pay close attention to:
- Any restrictions on your specific activities (e.g. asbestos removal)
- Subcontractor clauses (and whether labour-only subbies are treated differently)
- Any conditions about risk management, documentation, or licensing
- Excess amounts and how they apply
5. Provide Supporting Documentation
In some cases, insurers may ask for additional documentation. This might include:
- Licences and certifications
- SWMS / safety procedures
- Training records
- Example contracts or scopes of work
- Details of how you manage subcontractors
If you are asked for documentation, provide it as soon as possible. This will prevent delays as your application is processed.
6. Sign the Contract
Once you’re confident that the policy suits your company, and the insurance has confirmed the terms, you can sign the contract. This is also the time to request your certificate of currency (COC), which can be used as evidence of insurance for both clients and regulatory bodies.
Congratulations – you are now insured.
7. Keep Your Policy Up-to-Date
If turnover increases, your services change, or you take on new types of work, inform your insurer right away. This is crucial, as any discrepancies could be used to deny claims later. Always be proactive and honest with your insurer, even if it means paying a little more in premiums.
Or: Hire a Broker
If this process sounds too time-consuming (as it does for many business leaders), there is an alternative available to you. An insurance broker will liaison with the insurer on your behalf, cutting the application process in half. They also provide valuable guidance that helps you determine which policies are most appropriate for your needs.
Learn more about the claims process while working with a broker
Common Exclusions
One of the biggest mistakes made by demolition firms is failing to properly check the exclusions. They assume they’re covered, but when the time comes to make a claim, their insurer leaves them out to dry. This scenario is almost worse than being uninsured, as the company may not have budgeted for emergencies under the belief that it would be covered.
Here are some common exclusions to watch for when applying for public and product liability insurance in Australia:
Hazardous Materials
If you work with asbestos and other dangerous materials, you will almost certainly need a specialised policy. Most standard insurance will not cover this, because it drastically increases your risk level. This is why it’s so important to clearly lay out your activities in detail. The insurer (or your broker) can then inform you about potential issues that affect your coverage.
Internal Property Damage or Injuries
Public liability and property insurance will only cover third parties. It does not protect against any damage to your own property, or employee injuries. These incidents are covered under other policies, such as:
- Workers’ compensation (for worksite injuries)
- Plant and motor insurance (equipment damage or loss)
Contractual Liability
If you have agreed to be liable for certain damages or injury in a work contract, this may affect your ability to make a claim for those specific incidents. Check all contracts carefully before signing, as some clients (particularly those running a business of their own) will attempt to make you liable for everything that could possibly go wrong – even above and beyond your actual legal responsibilities.
Professional Advice and Design Errors
If your business provides professional services (for example, consulting), these activities will not be covered by your product liability and public liability insurance. For these, you will need another policy, such as professional indemnity insurance.
Incidents Caused by Neglect
If you are shown to be intentionally negligent, and this behaviour can be directly linked to an accident or injury, you may not be covered. Insurance is designed to protect against genuine emergencies. It is not an excuse to stop doing your due diligence. This is why it can be helpful to provide worksite safety documents during your application – this proves that you are putting the work in to prevent incidents.
What will it Cost?
Your main expense associated with insurance will be premiums. This is a monthly fee designed to offset the costs you incur during an incident. It is how the insurer can afford to cover you.
Premiums will always be less expensive than an incident, because the insurance company leverages economies of scale: in other words, they charge many businesses a much smaller amount, rather than charging fewer companies a larger amount. Only some of these companies will ever make a claim, thus allowing the insurer to cover incidents that do occur without losing money.
The exact cost is almost impossible to predict, because it is typically highly tailored to your unique company. However, there is a set of factors that are consistently considered by insurers:
- The size of your company
- Your annual turnover
- The exact work activities you perform
- Your previous claims history (many claims in the past makes you appear higher-risk)
- Your worksite safety, or lack thereof
All of these factors contribute to your risk level – i.e. the amount of money you are likely to cost the insurer. The more concerned they are, the more they will charge you. Note that each insurer will also use their own private pricing structure, which will further impact the amount you pay.
How to Reduce Premiums (Without Gutting Your Cover)
Premiums can be expensive. To reduce them, many demolition firms will resort to accepting less cover than they actually need. But this is very dangerous. Instead, here are some smarter ways to reduce your public and product liability premiums:
- Tighten Risk Management: Solid procedures, documented training, a safe work method statement (SWMS), and site controls all lower your perceived risk level, and make insurers feel more confident.
- Be Honest About Your Activities: Failure to clearly define your work activities can create coverage issues at claim time. Be honest, accurate, and detailed.
- Consider Sensible Excess Levels: An “excess” is the amount your insurer may ask you to contribute towards incident payment. Adjusting this amount can reduce your premiums, but make sure you are being realistic about how much you can afford.
- Use a Specialist Broker: A broker will help you get the best deal possible on your insurance. Choose one that specialises in demolition, especially if your company is very high-risk.
- Get Many Quotes: If you only obtain one or two quotes, it’s very easy for an insurer to price you at the upper end of the scale without you realising. Many will try this, to see if they can convince you to pay more. By collecting many quotes, you can get a clearer picture of what the average is. This allows you to identify when you are being asked to pay more than is reasonable.
Choosing the Right Provider
Each provider is different, and the one you choose will greatly affect your level of protection. When comparing your options, look for these traits:
Industry Experience
If an insurer doesn’t understand your line of work, you may end up with insufficient coverage (or even none at all, as your field is higher risk than most). It is imperative to choose one who specialises in your industry.
Clear Communication
You shouldn’t need to be an insurance expert to understand what they’re saying. Look for an insurer who is upfront, honest, and explains concepts that you are unfamiliar with. They should also be responsive when you reach out. If they tend to ignore your emails for days on end, move on..
Policy Suitability
It’s tempting to just pick the cheapest insurer, but this can cost you more in the long run. A low premium won’t be nearly as useful when you can’t get claims approved because a core work activity is excluded. Always check that the policies they offer are suitable for your business.
Get Insured Now, Prevent Big Problems Later
Insurance is a necessary step to protect your firm against injuries, accidents, and legal issues. If you don’t have a public and product liability policy, then it’s time to acquire one. It might cost a little more in the short term, but you’ll thank yourself later when you don’t have to pay thousands of dollars out of pocket.
If you’re not sure how to find the right policy for your needs, TIC can help. We work with demolition and construction professionals to get them the highly specialised policies their jobs require. Get in touch with an expert to learn more about how we can assist you.
FAQs
Public and product liability insurance is a combined policy that covers your business against third-party claims. It protects against personal injury and property damage caused by either your business activities or by a product you supply.
Yes, public and product liability insurance is required by law in several states. You should always check your state’s laws regarding insurance for high-risk fields.
No, standard product and public liability insurance usually does not cover asbestos removal or other hazardous materials. You will need a specialised policy for these activities.
The exact cost of public and product liability insurance depends on many factors, primarily your risk level - i.e. the amount you are likely to cost an insurer. Always get a direct quote if you are uncertain.
When applying for public and product liability insurance, it’s important to keep worksite safety documents and all relevant business information (including a description of your activities) handy. You may be asked for this.