Public Liability vs Product Liability: What Does Each Policy Cover?

Under business.gov.au, public liability insurance responds when negligence causes death, injury or property damage to another person. Product liability insurance responds when a product supplied by the business causes injury, death or property damage to another person or business. Both descriptions were current on the cited page; figures checked 1 October 2026.

What does each policy cover side by side?

The clearest comparison starts with the insured event and the affected third party.

These are broad distinctions, not a substitute for the definitions and terms in an individual policy.

Can the same incident engage both policies?

Both descriptions may be relevant to a product-related incident. For example, business.gov.au lists food making a customer sick as an injury or death that public liability may cover, while product liability addresses harm caused by a product.

That overlap does not mean one policy automatically replaces the other. The insured event, legal liability, policy definitions, exclusions and conditions would all need to be considered.

Is either policy compulsory?

There is no single answer for every business. business.gov.au says legal insurance requirements depend on the type of business. Some states and territories require public liability insurance for certain occupations, and a business may also need insurance because the people it deals with require it.

A business that makes, sells or supplies goods may need product liability insurance, even when those goods are provided through a repair or service. Check the rules that apply to the occupation, location and contracts rather than assuming that either policy is always optional or always mandatory.

What should a business check before choosing a policy?

• Identify what could cause the loss: negligence-related harm, product-caused harm or a possible combination.
• Record who could be affected, such as a customer, visitor or another business.
• Check whether state or territory rules apply to the occupation.
• Check whether people the business deals with require a particular type or level of cover.
• Read the Product Disclosure Statement for definitions, insured events, exclusions, limits and conditions.
• Talk to a licenced insurance broker, insurer or business adviser about the available options.
• Find an authorised general insurer on the Australian Prudential Regulation Authority’s register. An insurance broker’s licence can be checked on the Australian Securities and Investments Commission’s professional register.

This comparison is general information, not financial or legal advice. Before deciding, check the relevant regulator page and the policy’s Product Disclosure Statement.

Sources

• Types of business insurance | business.gov.au

FAQ

Does public liability cover harm caused by a product?

It may. business.gov.au gives injury or death caused by food making a customer sick as an example of harm public liability may cover. Product liability may also be relevant when a product causes injury, death or property damage, so the policy wording must be checked rather than assuming either policy applies by itself.

Does product liability cover customers and other businesses?

Product liability is intended to respond when a product causes injury, death or property damage to another person or business. Whether a particular loss falls within the policy depends on its terms and the circumstances of the claim.

Is public liability compulsory for every business?

The cited guidance says some states and territories require public liability insurance for certain occupations. A business may also need cover because the people it deals with require it. Check the applicable occupation and jurisdiction rather than relying on a general rule.

Do I need product liability if I sell or repair goods?

You may need it if you make, sell or supply goods, including through a repair or service. That guidance does not mean every business supplying goods has the same legal requirement, so the applicable rules and policy terms need to be checked.

Can public liability replace product liability?

Do not assume that it can. Public liability is described around negligence-caused harm, while product liability is described around harm caused by a product. If both descriptions may apply, review both policies.