If you’re self-employed and applying for a home loan or low doc mortgage, your broker or lender may ask you to confirm your insurance cover. Public liability insurance is one of the policies that often comes up — but it’s also one of the most misunderstood.
This guide explains what public liability insurance actually covers, whether you legally need it, and why it matters when you’re applying for finance.
What Is Public Liability Insurance?
Public liability insurance protects you if a third party suffers a bodily injury or property damage as a result of your business activities — and holds you legally responsible.
For a self-employed person, that might mean:
- A client trips on equipment you left at their premises and breaks a wrist
- A courier delivering to your workshop damages their vehicle after hitting debris from your work
- A customer claims a product or service you provided caused them financial or physical harm
Without public liability cover, you’re personally liable for compensation payments, legal defence costs, and court awards. In Australia, personal injury claims can easily reach six figures.
Who Needs It?
Public liability insurance is not legally mandated for most sole traders or freelancers — but it is effectively compulsory in practice for several reasons:
Trade licensing requirements. Most states require licensed tradespeople (builders, electricians, plumbers) to hold public liability cover as a condition of their licence. In NSW, the Home Building Act requires a minimum $5 million cover for licensed contractors.
Client and site requirements. Construction sites, government contracts, and most corporate clients require a certificate of currency (proof of cover) before you can set foot on site or begin work. Without it, you won’t win the contract.
Industry body membership. Many industry associations (Master Builders, HIA, RCSA, AIBB) require members to hold current public liability cover.
Lender requirements for low doc borrowers. When assessing self-employed borrowers, some lenders and mortgage insurers use active professional insurance as an indicator of a legitimate, operating business. It’s not a universal requirement, but it does come up.
What It Doesn’t Cover
Public liability insurance is narrowly defined. It does not cover:
- Your own injury or illness — that’s personal accident or income protection insurance
- Professional advice errors — that’s professional indemnity insurance
- Damage to your own property or tools — that’s a separate trade or equipment policy
- Deliberate or criminal acts
- Contractual liability you’ve assumed beyond what would apply at common law
- Workers’ compensation — separate statutory requirement if you have employees
Knowing what falls outside the policy matters as much as knowing what’s inside it.
How Much Cover Do You Need?
Standard public liability policies in Australia come in three tiers: $5 million, $10 million, and $20 million. The right level depends on:
- What work you do — a bookkeeper has very different exposure to a licensed electrician working on high-rise buildings
- Where you work — government and major infrastructure contracts often specify $20 million minimum
- Who your clients are — large corporates and ASX-listed companies typically require $10–20 million
For most sole traders operating in standard commercial or residential settings, a $10 million policy provides a reasonable baseline. A $5 million policy is usually sufficient for low-risk office-based work.
What Does It Cost?
Public liability premiums for sole traders vary considerably by trade and risk profile. Rough annual ranges for common occupations in 2026:
| Occupation | Approximate Annual Premium |
|---|---|
| Bookkeeper / accountant | $400–$600 |
| IT contractor / consultant | $500–$800 |
| Freelance designer / copywriter | $350–$550 |
| Tradie (carpenter, painter) | $800–$1,800 |
| Builder / licensed contractor | $1,500–$4,000+ |
| Cleaning contractor | $700–$1,500 |
| Personal trainer | $500–$900 |
These are indicative estimates only. Your premium is also influenced by turnover, the number of employees (if any), claims history, and the specific activities you undertake.
Online comparison platforms such as BizCover, NRMA Business, and CGU allow you to get indicative quotes in minutes. For more complex trades or higher-risk activities, a commercial insurance broker can often find better terms than direct channels.
Bundling with Professional Indemnity
If you provide professional advice, consulting, or services where the quality of your output could cause a client financial loss — think accountants, consultants, mortgage brokers, health practitioners — you should also consider professional indemnity (PI) insurance alongside public liability.
PI covers you for claims arising from actual or alleged negligence in your professional advice or services. Public liability does not.
Many insurers offer combined “business pack” or “professional pack” products that bundle PI + public liability at a lower combined premium than buying separately. This is often the most cost-effective approach for knowledge workers.
Insurance and Your Home Loan Application
When you apply for a low doc loan or self-employed home loan, the lender assesses the viability of your business as part of serviceability. Having current, relevant business insurance supports your case in a few ways:
- It demonstrates an active, legitimate business (particularly relevant for ABN-only or BAS-based assessments)
- Some lenders and LMI providers include insurance as part of their checklist for self-employed borrowers
- It reduces the perceived risk of income disruption — important when the lender is relying on business income to service the debt
This doesn’t mean you need to over-insure to get a loan approved. But if you’re operating a trade or client-facing business and don’t hold public liability cover, it’s worth addressing before you sit down with a broker.
Getting a Quote
The fastest way to compare public liability policies in Australia is via an online business insurance platform. Key things to have ready:
- Your ABN and business structure (sole trader, company, partnership)
- Your occupation / industry code
- Annual turnover or projected turnover
- Number of employees (if any)
- Whether you work on client sites or from your own premises
Quotes usually take 5–10 minutes and policies can be issued same day with a digital certificate of currency.
General information only. Not financial or insurance advice. Read the Product Disclosure Statement before purchasing any insurance policy. Licensing requirements vary by state — check with your relevant state licensing authority.