Insurance is a constant challenge for demolition firms. The various policies required can cost thousands per year, creating budget strain that most feel they could do without. But without them, your company is at risk of fines, legal action, and out-of-pocket recovery costs.
It’s crucial to carefully weigh the benefits of each policy against the associated costs. One question many firms have is about public liability insurance vs product liability insurance. These two policies sound almost identical at face value, making it difficult to decide which is necessary. So today, we’ll explain:
- What these forms of insurance cover
- What the difference is between them
- Which are actually beneficial for your firm
What’s Public Liability Insurance?
Public liability insurance protects your company against claims that a third party has suffered injury or property damage as a result of your business activities. For instance, a client may visit your premises and trip over equipment, or your team might accidentally damage a neighbouring property while completing work. In situations like this, public insurance liability helps cover the associated costs.
What Is Product Liability Insurance?
While it sounds very similar, product liability insurance is designed for a different purpose. This policy shields you against claims that a product you supply, sell, manufacture, or otherwise distribute has caused harm. This might mean a faulty component, an unsafe item, or a product that fails shortly after installation.
Even if you did not manufacture the product yourself, you can still be held liable if you provided or endorsed it. Product liability insurance covers the costs this can incur.
Product Liability Insurance vs Public Liability Insurance: Which is Best?
But which do you need? At bare minimum, you need public liability insurance. Not only does it address a danger inherent to your line of work, but it’s legally required in a number of states. Neglecting this crucial policy could leave you subject to fines, or even cost your demolition license entirely.
Product liability insurance is a little more complicated. It might seem unnecessary for some companies, at first, due to its strict focus. But you might be surprised by what counts as a “product” under the law. Technically, the definition could cover any physical object you happen to install or otherwise provide during your normal business activities.
Honestly, it’s safest to invest in both rather than choosing one over the other. These two policies cover different things, and thus investing in both of them provides a higher level of protection. The rule of thumb is that it’s always better to be overinsured than underinsured, if you must choose. Besides, many insurers bundle them together, making it easier to obtain both at once.
What About General Demolition Liability Insurance?
In addition to these highly specialised policies, a more generic form of demolition liability insurance exists. These can help address certain claims of injury and damage, but are not designed for the same highly specific concerns as either public or product liability, so keep that in mind if you’re considering such a policy. They also may not fulfil the legal requirement to obtain public liability insurance.
Get the Policy You Need to Reduce Risk and Protect Operations
There are dozens of types of insurance out there, and obtaining the right ones is crucial. Public and product liability are two policies that can make an enormous difference to your financial success over time. If you can only choose one, then the former is necessary to ensure compliance with your legal obligations. But if you can, it’s always best to invest in both. This strategy provides the extra protection you need to preserve business operations and prevent financial loss.
We know insurance is stressful. That’s why we work to make each step of the process easier, from finding a provider to making a claim. If you’d like to find out just how simple this important task can truly be, reach out to discuss your needs.
FAQs
Yes, there is a difference between public liability insurance and product liability insurance. The former protects your business against claims or personal injury or property damage as a result of operations, while the latter focuses on harm caused by a product you have manufactured, supplied, or provided.
Public liability insurance is mandatory in several Australian states. Failure to obtain or maintain it could result in fines or even the total loss of your license.
Yes, there is an easy way to obtain both policies at once. Some insurers bundle them, allowing you to purchase both under a single premium rather than paying for both separately.
Public and product liability insurance is a bundled policy that protects you from claims of third-party harm as a result of your products or operations. Professional indemnity insurance, on the other hand, protects you from claims made on the basis of advice or guidance you offered.
The insurance you choose, out of these three options, will depend on your specific needs. Generally it’s always better to obtain more insurance than you think you require, so it might be within your best interests to purchase multiple policies. Note that if you operate in a state where public liability insurance is mandated, other policies will not fulfill this requirement.