Costs, Price Factors and 2026 Rules
What sets a business liability premium? The rating factors Australian insurers use
Occupation, turnover, subcontractors, claims history, limits, excess and products all change a liability premium. See how each works and which ones you can change.
An Australian business liability premium is set mainly by four things: what your business does, how much of it you do (usually measured by turnover or wages), your claims history, and the cover you ask for (limit, excess and extensions). Insurers then adjust for subcontractors, products, location and specific activities. You cannot change your occupation for the sake of a cheaper quote, but you can present the risk accurately and completely, manage subcontractors, choose the excess deliberately and keep evidence of good risk management, all of which can affect the price.
This guide is part of the overview of public liability insurance costs. Figures are illustrative. GST and stamp duty are then added on top; see GST and stamp duty on business insurance. Shops and offices should also read business pack versus standalone liability.
Factor 1: occupation and activities
The occupation is the starting point. Insurers group businesses by industry and then by activity, because a cafe, a scaffolder and a dog groomer produce very different claims. Within an occupation, specific activities can move the price a lot or be excluded altogether:
| Activity | Why insurers care | Typical underwriting response |
|---|---|---|
| Work at heights | Falling objects and falls onto third parties | Height limits in the wording, loading or exclusion above a set height |
| Hot works (welding, grinding, soldering) | Fire spreading to other property | Conditions such as fire watches and extinguishers on site |
| Underground or excavation work | Damage to pipes and cables | Underground services exclusions or higher excess |
| Demolition, asbestos or structural work | Severe and long-tail claims | Often excluded or referred to specialist insurers |
| Crowd events or amusement rides | Many members of the public at once | Event-specific rating and conditions |
| Work in mines, rail corridors or airports | Contract requirements and severity | Higher limits, specific endorsements |
If an activity is occasional, still tell the insurer. The non-disclosure guide shows what can happen to a claim when an activity was left off.
Factor 2: size of the business
Turnover is the most common measure of size for liability insurance, because more work done or more goods sold means more chances of something going wrong. Some insurers use wages, the number of staff, or the number of vehicles or sites instead. You are normally asked for the estimated turnover for the coming year and the actual figure for the past year. Some policies are adjustable: the premium is based on an estimate and adjusted after the year ends using the actual figure.
Illustrative arithmetic: if an insurer's rate for an occupation is $2.10 per $1,000 of turnover with a $450 minimum premium, a $150,000 business pays the minimum ($150 x 2.10 = $315, below $450), while a $900,000 business pays $900 x 2.10 = $1,890. This is why small businesses often find the price barely changes as they grow at first, then rises.
Factor 3: subcontractors and labour hire
Insurers ask how much you pay subcontractors, and whether they hold their own public liability insurance. If a subcontractor without cover damages a client's property, the client will usually pursue you as the head contractor. Many insurers therefore add payments to uninsured subcontractors to the rating base, or exclude claims arising from their work. Keeping current certificates of currency for every subcontractor is one of the most effective ways to keep the premium down. See subcontractors and certificates of currency.
Factor 4: claims and incidents
A clean history usually earns the best terms. Insurers typically ask about claims and incidents for the past five years, including:
- claims paid, declined or still open;
- incidents that did not become claims;
- letters of demand or complaints that might lead to a claim.
A single small claim may not change much; a pattern of claims usually leads to a higher premium, a higher excess or a decline. You must disclose incidents even if nothing was paid.
Factor 5: the cover you ask for
| Choice | Effect on premium | Points to check |
|---|---|---|
| Limit of liability ($5m, $10m, $20m or more) | Higher limits cost more, but the increase is usually smaller than the extra cover | What your leases and contracts require; see choosing a limit |
| Property damage excess | A higher excess lowers the premium | Whether you could pay it several times a year; see choosing an excess |
| Products liability | Adds premium for businesses that supply goods | Aggregate limit and territory |
| Extensions such as principal's indemnity, property in your care or tools on site | Each can add premium | Sub-limits and conditions |
| Territory including the USA or Canada | Often a large loading or excluded | Exports, online sales and travel for work |
Factor 6: location and premises
Location matters less for liability than for property cover, but insurers still look at it. A shop with heavy foot traffic and stairs presents more slip-and-fall risk than an office above it. Some insurers also consider the state, because personal injury damages are assessed under each state's civil liability legislation, such as the Civil Liability Act 2002 (NSW), the Wrongs Act 1958 (Vic) and the Civil Liability Act 2003 (Qld).
What you can control
- Describe the business accurately and fully. An accurate description avoids claims being reduced later and lets the insurer apply the right rate.
- Collect subcontractor certificates and keep them current.
- Choose an excess you can afford to pay more than once.
- Show your risk controls: safe work method statements, incident registers, training records, cleaning schedules for premises.
- Ask for the limit you need, not a default, and compare quotes at that limit.
- Shop at renewal: insurers' appetite for an occupation changes, so the same risk can be priced quite differently from one year to the next.
Frequently asked questions
Why did my premium go up when I had no claims?
Insurers reprice their whole book of business as claims costs, reinsurance costs and their appetite change. Turnover growth, a change in activities or a change in the rules for your occupation can also raise the price. Ask your insurer or broker which factor changed.
Does using an industry association policy reduce the price?
Some associations arrange group schemes for members, which can offer wording tailored to the trade. The price may or may not be lower; compare it like for like.
Will a claim follow me to a new insurer?
Yes. Proposal forms ask about past claims and incidents, and you must answer accurately.
Do insurers use credit scores for business liability?
Practices vary. Insurers may consider the financial position of the business, particularly for larger policies or premium funding. Ask what information is used.
Sources
- ASIC — insurance conduct and broker licensing
- Australian Bureau of Statistics — ANZSIC industry classification used to describe occupations
- Insurance Council of Australia — industry body for general insurers
- business.gov.au — guidance on choosing business insurance
- Federal Register of Legislation — Insurance Contracts Act 1984
