Whether in-store, on-site or at events, businesses interact with customers, suppliers and the public every day. While most of these interactions run smoothly, issues can arise – and when they do, the consequences can be significant.
Public Liability claims can stem from a range of situations, including personal injury or property damage. These claims often involve legal complexity, potential reputational impact and substantial financial exposure. Knowing how to respond to an incident and what do it if a claim is made later on, can make a significant difference to the outcome.
This guide outlines what a public liability claim can involve, what steps to take and the common pitfalls to avoid.
What is a Public Liability Claim?
A public liability claim arises when a third party, such as a customer, supplier, visitor or contractor, suffers injury or property damage in connection with your business activities.
You may become aware of an issue at the time of the actual incident, or you may receive a legal letter weeks (or even months) later.
Depending on the circumstances, an injured party may seek compensation for:
- Medical expenses
- Loss of income
- Ongoing care or home modifications
- Permanent impairment
- Costs to rectify the damage caused to physical property
- Legal costs
In more serious cases, these claims can reach hundreds of thousands or even millions of dollars.
For a claim to succeed, the claimant must generally demonstrate that your business owed them a duty of care and that the injury or damage occurred as a result of a failure to meet that duty.
What to Do After an Incident
If an incident occurs, taking the right steps early can help protect both the injured party and your business.
1. Ensure safety first
Provide appropriate assistance and arrange medical help if required
2. Record the incident immediately
Complete an incident report as soon as possible and include:
- Photos of the scene
- Details of what occurred
- Names and contact details of any witnesses
A SafeWork NSW Incident Report template can be a useful starting point.
3. Preserve evidence
Where possible, retain CCTV footage and avoid altering the scene until details have been documents.
4. Notify your insurance broker or adviser promptly
Early notification is important, even if you don’t believe that it will eventuate into a claim. Your adviser can guide you on the next steps and ensure that the matter is reported correctly to your insurer.
What to Do if You Receive a Claim
If you receive a letter of demand or correspondence from a lawyer:
- Do not respond immediately
- Forward the documentation to your insurance broker or adviser as soon as possible
- Follow their guidance on next steps
Your insurer will typically appoint specialist lawyers to manage the claim on your behalf. This includes handling correspondence, defending the claim if required and covering legal costs and any damages payable under the policy.
What Not to Do
How you respond can potentially impact your insurance cover, so its important to avoid common mistakes.
Do not admit liability
Avoid making statements about what caused the incident and who is at fault. Liability should be assessed by your insurer and their legal representatives.
Be mindful in your communication
You can still assist the injured person and show concern, but avoid speculating or making definitive statements about responsibility.
Do not engage directly with lawyers or agree to payments
Any communication or requests for compensation should be referred to your insurance broker or adviser to review and advise on the next steps.
How Public Liability Insurance Responds
Public liability insurance is designed to protect your business from the financial impact of third-party claims.
Depending on your policy, it can cover legal defence costs, investigation expenses, compensation or damages payable.
Having the right cover in place and notifying claims correctly ensures you can access this protection when it matters most.
Reducing Your Risk
While not all incidents can be prevented, strong risk management can reduce both the likelihood and severity of claims. Consider the following:
- Regular site inspections and hazard identification
- Clear signage and maintenance procedures
- Staff training and induction processes
- Contractor management and supervision
- Documented policies and procedures
Your insurance adviser can assist in reviewing your current approach and identifying areas for improvement.
Public liability claims can be complex and costly, but knowing what to do and what to avoid can significantly improve the outcome.
Public liability insurance plays a critical role in protecting your business and its reputation, but it works best when supported by prompt action, clear processes and the right advice.
If you’re unsure about your cover or would like guidance on managing risk in your business, speak with your insurance adviser to ensure that you’re property protected.
General Advice Warning
This communication including any weblinks or attachments is for information purposes only. It is not a recommendation or opinion, your personal or individual objectives, financial situation or needs have not been taken into account. This communication is not intended to be a constitute personal advice. We strongly recommend that you consider the suitability of this information, in respect of your own personal objectives, financial situation and needs before acting on it. This document is also not a Product Disclosure Statement (PDS) or a policy wording, nor is it a summary of a particular product’s features or terms of any insurance product. If you are interested in discussing this information or acquiring an insurance product, you should contact your insurance adviser to obtain and carefully consider any relevant PDS or policy wording before deciding whether to purchase any insurance product.
