Claim Failures, Disputes and Official Sources
Common public liability exclusions in Australia and how to check your policy
The public and products liability exclusions that most often decide Australian claims, from faulty workmanship and professional advice to asbestos, pollution and vehicles.
The exclusions that most often decide Australian public liability claims are: the cost of fixing your own faulty work, professional advice or design, property in your care, custody or control, contractual liability, injury to your own employees, registered motor vehicles, pollution that is not sudden and accidental, asbestos, and limits on height, depth or hot works for trades. Many exclusions have exceptions or write-backs that restore some cover, so you need to read the exclusion, the definitions and the extensions together. Before buying, list your three most likely claims and check how each wording treats them.
This guide is part of the liability claim mistakes overview. Examples are illustrative; wordings vary between insurers.
The exclusions that matter most
| Exclusion | What it usually removes | Common exception or extension | Who it affects most |
|---|---|---|---|
| Faulty workmanship | Cost of redoing or replacing your own work or product | Resulting damage to other property is usually still covered | All trades, manufacturers |
| Professional advice or services | Claims arising from advice, design, specification or a professional service | Incidental advice in some trade wordings | Consultants, designers, trades who design |
| Care, custody or control | Damage to property you are working on or have in your care | Extension with a sub-limit, such as $25,000 or $50,000 | Cleaners, mechanics, removalists, trades |
| Contractual liability | Liability assumed by contract beyond liability at law | Lease and principal's indemnity write-backs | Tenants, subcontractors |
| Employees' injuries | Injury to your workers | Workers compensation responds instead | Every employer |
| Registered vehicles | Injury and damage caused by registered vehicles | CTP and motor insurance respond; some cover for loading and unloading | Businesses using vehicles |
| Pollution | Gradual pollution or contamination | Sudden, identifiable, unintended and unexpected events often written back | Manufacturers, cleaners, farms |
| Asbestos | Any claim involving asbestos | Rarely written back | Builders, renovators, demolition |
| Products exported to the USA or Canada | Claims from those territories | Can sometimes be bought for a loading | Manufacturers, importers, online sellers |
| Height, depth and hot works | Work above or below set limits, or hot works without conditions | Endorsement for higher limits | Roofers, electricians, plumbers, welders |
| Known circumstances | Incidents you knew about before the policy started | None; notify the previous insurer | Anyone switching insurers |
| Fines and penalties | Fines, penalties and punitive damages | Some legal defence cost cover under management liability | All businesses |
Faulty workmanship: the most misunderstood exclusion
Liability insurance is not a warranty for your work. It pays for the consequences of your work damaging something else.
Illustrative example: a waterproofer seals a shower base incorrectly. Water leaks into the apartment below, ruining the ceiling and carpet.
- Cost to re-waterproof and retile the shower: $6,800, excluded as faulty workmanship.
- Damage to the apartment below: $11,500, usually covered, less the excess.
- If the excess is $1,000, the insurer pays $10,500 and the waterproofer pays $1,000 + $6,800 = $7,800.
Property in your care, custody or control
Many claims happen to the exact property you are working on: the car being serviced, the carpet being cleaned, the furniture being moved. A standard wording may exclude it, and an extension may cover it only up to a sub-limit and only while you are working on it. In the worked quote comparison, this single exclusion turned the cheapest quote into the most expensive in the most likely scenario.
Professional advice inside a trade policy
An electrician who designs a switchboard layout, a builder who produces drawings or a landscaper who specifies drainage may be giving professional advice. Trade wordings sometimes cover incidental advice given free of charge with the work, but exclude advice given for a fee. If you charge for design or consulting, ask about professional indemnity. See public liability versus professional indemnity.
WHS fines and penalties
Fines are generally not covered by liability insurance. Separately, work health and safety laws in a number of Australian jurisdictions, including NSW, Victoria, Western Australia and Queensland, now make it an offence to enter into insurance or indemnity arrangements that cover WHS penalties. Management liability policies may still cover legal defence costs for WHS prosecutions where the law allows. Check the current position with your state WHS regulator.
How to test a wording against your business
- Write down your three most likely claims and your worst realistic claim.
- For each, find the insuring clause, then search the exclusions for any that could apply.
- Check the definitions, for example of "property damage", "your business" and "products".
- Look for extensions that write cover back, and their sub-limits and special excesses.
- Ask your insurer or broker to confirm in writing how a specific scenario would be treated.
- Record the answers when you compare quotes with the liability quote comparison tool.
When an exclusion is relied on
If the insurer declines a claim under an exclusion, ask for the exact clause and the facts it relies on. Exclusions are generally read narrowly and the insurer usually bears the burden of proving that an exclusion applies. If the term is unfair in a standard form small business policy entered into or renewed since 5 April 2021, the unfair contract terms protections may also be relevant. You can complain internally and then to AFCA. Also consider whether the real problem is a contractual indemnity you agreed to.
Frequently asked questions
Can I remove an exclusion?
Some exclusions can be removed or narrowed by endorsement for an extra premium. Others, such as asbestos, are rarely removed.
Why does my policy exclude work above 10 metres?
Height limits reflect the insurer's appetite. If you work higher, tell the insurer and ask for an endorsement or a different insurer.
Is damage to underground cables covered?
Many policies cover it but apply a special excess, or require you to have checked service plans first. Read the conditions.
Is food poisoning covered for a cafe?
Usually yes, under products liability for the food you supply, subject to the policy's terms and limits.
Sources
- Safe Work Australia — WHS laws and links to state regulators
- ASIC — unfair contract terms in insurance and claims handling
- AFCA — published decisions on exclusions
- business.gov.au — public liability guidance
