So what does public liability insurance cover, exactly?

It provides cover against claims made by members of the public who have: suffered an injury or damage in connection with your business premise.

Compensation awarded resulting from a claim could include: loss of earnings, future loss of earnings, damages that are awarded to the claimant, together with legal costs in defending against the claim, and also the claimant's legal costs that you would incur if you are found to be at fault.

It's good practice to have sufficient cover in place to protect yourself and your business against both claims of negligence which resulted in injury to a member of the public or 

damage to property.

When taking out public liability insurance, you need to tell your insurer what type of business you operate. This is not just for the sake of records, but will help you come to an agreement over the type of policy best suited to you - whether your insurer judges cover up to $1 million to be sufficient for your needs or if a larger policy of around $5 million would be more appropriate in the circumstances. 

Is it compulsory?

While public liability insurance is not a legal requirement for some businesses, it should be considered essential if members of the public will be interacting with your company in any way - from customers receiving deliveries to clients visiting your office or work premises. This means that even home-based businesses should consider public liability insurance if their home office is also used as a meeting place.

Don't assume you will be safe without public liability insurance just because you run a small business, or because you don't make deliveries. Something as simple as your visitor falling over in a chair while visiting your offic, could cost you thousands if you're uninsured.