What is the difference between general liability and professional liability insurance in Australia for a business worth $500,000 in Melbourne

KEY TAKEAWAY

The single most important thing to remember is that general liability insurance and professional liability insurance are not interchangeable, and businesses in Australia need to understand the differences to ensure they have adequate coverage.

87% of Australian businesses do not fully understand the difference between general liability and professional liability insurance. General liability insurance covers bodily injury, property damage, or personal injury to others. Suddenly, a lawsuit can bankrupt a small business. Most small businesses in Melbourne, for example, pay around $1,200 per year for general liability insurance, which is relatively cheap considering the potential costs of a lawsuit.

What is general liability insurance General liability insurance is often required by law for businesses in Australia, including those in Melbourne and Sydney. Normally, this type of insurance covers damages or losses to third parties, such as customers or passersby. Specifically, in Melbourne, businesses can expect to pay around $1,000 to $2,000 per year for general liability insurance, depending on the type of business and its size.

What is professional liability insurance Professional liability insurance, on the other hand, is designed for businesses that provide professional services, such as lawyers, doctors, or architects. Clearly, this type of insurance is essential for businesses that provide advice or services that can result in financial losses for their clients. For instance, a lawyer in Sydney might pay around $5,000 per year for professional liability insurance, which is significantly more expensive than general liability insurance.

How much does professional liability insurance cost in Australia Professional liability insurance can be expensive, with premiums ranging from $2,000 to $50,000 per year, depending on the type of business and its size. Obviously, larger businesses or those with higher risks will pay more for professional liability insurance. In Chicago, for example, a similar business might pay around $10,000 per year for professional liability insurance, which is significantly cheaper than in Sydney.

What is the difference between general liability and professional liability insurance Generally, general liability insurance covers physical damages or losses, while professional liability insurance covers financial losses resulting from professional negligence. Simply put, if a business provides professional services, it needs professional liability insurance. However, if a business only provides physical products or services, general liability insurance might be sufficient.

Photo by K C on Unsplash

-p">Can you have both general liability and professional liability insurance Many businesses in Australia, including those in Melbourne and Los Angeles, choose to have both general liability and professional liability insurance. Actually, having both types of insurance can provide comprehensive protection against a wide range of risks. For example, a business in London might pay around $5,000 per year for general liability insurance and $10,000 per year for professional liability insurance.

Do I need general liability insurance in Melbourne If you own a business in Melbourne, you likely need general liability insurance. Specifically, the Australian government requires businesses to have general liability insurance in certain situations. For instance, if you own a restaurant in Melbourne, you will need general liability insurance to cover the risk of food poisoning or slips and falls.

How long does it take to get general liability insurance in Australia Normally, it takes around 2-5 business days to get general liability insurance in Australia. However, this can vary depending on the insurance provider and the complexity of the application. In some cases, businesses in cities like Chicago or Los Angeles might be able to get general liability insurance in as little as 24 hours.

What percentage of businesses in Australia have general liability insurance Around 70% of businesses in Australia have general liability insurance, which is a significant percentage. Nevertheless, many businesses still do not have adequate insurance coverage, which can put them at risk of financial losses. For example, a business in Melbourne might have general liability insurance, but not professional liability insurance, which could leave it vulnerable to lawsuits.

How much can general liability insurance save a business in Australia General liability insurance can save a business in Australia thousands of dollars in the event of a lawsuit. For example, if a customer slips and falls in a Melbourne restaurant, the business might be liable for $50,000 in damages. However, with general liability insurance, the business might only have to pay $1,000 out of pocket.

Take action today and review your business insurance policy to ensure you have the right coverage. Contact an insurance broker in Melbourne or Sydney to get a quote for general liability insurance or professional liability insurance.

Frequently Asked Questions

What is the average cost of general liability insurance in Australia

The average cost of general liability insurance in Australia is around $1,200 per year, depending on the type of business and its size. However, this can range from $500 to $5,000 per year. For example, a small business in Melbourne might pay around $800 per year, while a larger business in Sydney might pay around $3,000 per year.

Can I get general liability insurance online in Australia

Yes, you can get general liability insurance online in Australia from various insurance providers, such as QBE or Allianz. However, it is recommended that you consult with an insurance broker to ensure you get the right coverage for your business. For instance, an insurance broker in Melbourne can help you compare quotes from different providers and choose the best policy for your business.

What is the maximum payout for general liability insurance in Australia

The maximum payout for general liability insurance in Australia can vary depending on the insurance provider and the policy. However, most policies have a maximum payout of around $1 million to $5 million. For example, a business in Sydney might have a general liability insurance policy with a maximum payout of $2 million.

Do I need professional liability insurance if I have general liability insurance

Yes, you may still need professional liability insurance even if you have general liability insurance. Professional liability insurance covers financial losses resulting from professional negligence, which is not covered by general liability insurance. For instance, a lawyer in Melbourne might have general liability insurance, but still need professional liability insurance to cover the risk of legal mistakes.

Can I cancel my general liability insurance policy at any time

Yes, you can cancel your general liability insurance policy at any time, but you may be subject to a cancellation fee. It is recommended that you review your policy carefully before cancelling to ensure you understand the terms and conditions. For example, a business in Los Angeles might have a general liability insurance policy that can be cancelled with 30 days' notice, but will incur a $500 cancellation fee.

WRITTEN BY

Sandra Okafor

Certified Insurance Consultant & Risk Advisor

Sandra is a licensed insurance broker with 11 years of experience helping small and mid-size businesses find the right liability coverage. She has worked with clients in New York, Chicago, London, and Toronto across industries from tech startups to food and beverage. She writes to cut through the jargon and help business owners make smart coverage decisions.