As a doctor, there's no doubt that you're thoroughly insured. Medical Indemnity insurance is required for you to practice in Australia, so whether your employment is private or public, you're covered. And you're a doctor, you know how important your health is, so you probably have health insurance too. Income Protection? Probably.
But what about Public Liability insurance? Do you need public liability insurance or a personal policy to cover yourself?
If you're a Sole Trader working as a contractor, it may be worth it. Chances are your contract has an 'Indemnity Clause' that states what various products and product liability insurance types you require and are responsible for, and more often than not, this includes Public Liability.
What Is Public Liability Insurance?
A public liability insurance policy covers you for third-party death or injury where you are found liable for personal injury caused by negligence not related to your profession as a medical practitioner. These kinds of claims are not covered by your Medical Indemnity insurance. This means that if a claim is made that alleges you are responsible for a physical or financial loss to the claimant, your Public Liability policy can be used to cover the cost instead.
What Does Public Liability Insurance Cover?
Here are some of the items public liability insurance will cover:
1) Personal Injury Coverage
Personal injury suffered by a third party, such as a customer, supplier, or member of the public, is a common risk for businesses that regularly interact with people. This is not to be confused with business insurance. Accidents to third party property can occur suddenly, whether it's a patient slipping in a hospital corridor or a practitioner unintentionally causing a reaction with a treatment product.
2) Damage to Property Coverage
Damage to Property coverage also applies to any property damage claims, occurring to property owned or controlled by someone else due to negligent actions during business operations.
3) Legal and Defense Costs Coverage
Covers legal expenses incurred in handling claims, which can accumulate quickly, especially in lengthy claim processes.
Public Liability Insurance vs Professional Indemnity Insurance
What's the difference between Public Liability Insurance vs Professional Indemnity Insurance? Let's take a look below:
Nature of Claims
Public Liability Insurance covers claims for bodily injury or property damage caused by accidents or negligence in general business operations or business premises. Professional Indemnity Insurance covers claims for financial loss or damages resulting from professional errors or negligence in specific business activities or professional services.
Industry Focus
Public Liability Insurance is relevant across various industries where legal liability for interactions with the public or property are common. Professional Indemnity Insurance is essential for specific professions like doctors, lawyers, architects, and consultants where professional advice and services are provided.
Legal and Financial Coverage
Both types of insurance provide coverage for legal costs and compensation payments, but the nature and scope of coverage differ significantly based on the type of liability being addressed.
Why Should Contractors Have Their Own Cover?
A public liability claim can be as simple as a patient tripping over your bag in the waiting room of a clinic and suffering a physical injury.
In this situation, it's likely that the patient's claim will be made against the practice and not you, and that its Public Liability insurance will often respond to the claim on your behalf. If you are employed as a direct employee, normally your cover is provided by the business, and it will absorb the cost. But what if you're a contractor instead?
Built into many insurance policies is the right of the insurer to recover costs. As a contractor, you are considered a separate legal entity to the practice, and its insurer may take legal action against you if you are considered liable for the original claim. This can result in you having to pay compensation to the practice's insurer.
At the very least, a savvy lawyer could name you as a contractor in an action against the practice in an attempt to have another option that they can leverage a settlement payout from.
CASE STUDY
Leanne works as a GP contractor at ABC Health Centre and is running late for her shift. In her rush to get ready to see patients, she places her medical bag with her coat over it on the floor at reception, partially blocking the hallway and forgets about it.
While Leanne is seeing her first patient of the day, an elderly patient trips on her bag and breaks his hip. The patient ends up making a Public Liability Insurance claim against ABC Health Centre for his injuries and the costs associated with them, which is covered by the practice's insurance.
As Leanne is responsible for the accident and working as a contractor for ABC Health Centre, the practice's insurer enacts its cost recovery clause and files a legal claim against Leanne for the settlement amount.
Since Leanne does not have personal Public Liability insurance, thinking she was covered by the practice, she now has to cover the unexpected cost of legal fees or settlement costs herself.
How Can Legal Costs Impact Contractors in Insurance Claims?
If you are working as a contractor and are not personally insured for Public Liability, such a situation could become an expensive accident.
Alternatively, if you own a medical practice, it's good risk management to ensure all your contractors have obtained personal policies for both Medical Indemnity and Public Liability.
Reviewing your insurance policies annually to ensure you not only have the right policies, but the right amount of coverage, is an important exercise that can end up saving you a lot of money in the event of the unexpected.
Are you unsure of your insurance needs or want to review your business structure? Speak to one of our Medical Insurance Experts to ensure you're adequately protected.
How Much Does Public Liability Insurance Cost?
Primarily, public liability insurance costs depend on who you are and what you do.
Sole traders and small businesses often pay between $500 and $1,500, or around $63.53 per month on average. However, some small businesses may pay less than $50 per month, while others may pay around $51–$100 per month.
The cost can vary depending on the trade, with some trades, like boilermakers and scaffolders, being more expensive than others. For example, in New South Wales, the starting cost for $5 million of public liability insurance for tradespeople can range from $560 for landscape gardeners to $970 for concreters.
The cost of public liability insurance (PLI) can vary depending on several factors, including:
- Business size: The number of employees and the type of work they do can impact costs.
- Location: Your state will impact it from a stamp duty perspective, your geographical location may impact it from a risk perspective, and the types of sites you work on can affect it, also from a risk perspective.
- Industry and risks: The type of business you run, how risky the work is, and how much risk you pose to the general public can all impact costs.
- Claims history: Past claims can indicate that you're more likely to make claims in the future.
