How Much Does Small Business Liability Insurance Cost?

From marketing overheads and essential equipment to rent and wages, running a small business comes with a list of expenses to plan for – and business insurance is one of them.

So, whether you’re reviewing your current level of cover or shopping around for a new policy after starting a business, it’s natural to ask: How much does small business insurance cost? Or more specifically, how much is the liability insurance cost for my business?

To help you get across how the price of public liability cover is typically calculated and whether there are any steps you can take to help lower your small business liability insurance cost, we’ve put together this guide to answer a few common questions. We’ll start with the basics.

What is public liability insurance?

Public liability insurance is designed to cover you if someone is injured or their property gets damaged because of your business’s negligence.¹

For example, it might cover your liability if a wet floor in your cafe causes someone to slip and fall, or if you’re a tradie and you accidentally damage someone’s property while you’re on the tools.²

How much does public liability insurance cost for a small business?

There’s no single, one-size-fits-all answer to this question because the cost of public liability insurance depends on a range of factors that are unique to your business^3,4 – we’ll go into further detail below.

Plus, public liability cover is often included as part of a broader small business insurance policy, so it’s not always possible to pinpoint the exact cost of one specific type of cover.⁵

What affects the cost of your public liability insurance premium?

A number of things can affect how much you’ll pay for public liability insurance cover as a small business owner, some of which include:

What your business does

Business type plays a key role in determining the cost of public liability insurance because by nature, some businesses involve or attract more risk than others.^3,4

For example, hospitality and trade-based businesses, such as plumbers and electricians, will typically have more public liability risk than a home-based business that has a relatively low volume of third-party traffic and engages in less risky physical business activities.⁴

As a general rule, businesses that have a high liability risk will typically have higher premiums than businesses with lower risk.⁴

How big your business is

Generally speaking, the bigger the business size, the bigger the risk of third-party personal injury or property damage, so the cost of insurance may be higher.^3,4

For example, if your small business employs 10 tradespeople who visit multiple properties each day, there’s a chance you’d need to claim for an incident more often than a trade-based business with just one employee. Therefore, you’ll be regarded as a higher risk to insure.⁴

Insurers might measure business size by:⁴

• Employee numbers
• Annual turnover
• A combination of both.⁴

Where your business is located

Your public liability insurance premium might be higher if your business operates in a high-risk location, such as a construction site or an airport.³

Where you live in Australia can also affect public liability insurance costs as tax systems and insurance-related charges differ from state to state.⁴ Two examples include:

• Stamp duty. Sometimes called transfer duty or general duty,⁶ stamp duty is a tax that’s applied to insurance policy premiums,⁷ but the rate of tax varies around the country – in some states and territories, it adds 10% to insurance premiums,⁸ in others, it adds 7% or less.^4,9
• Levies for emergency services. In New South Wales, an Emergency Services Levy helps fund the state’s emergency services and is included in insurance premiums,^8,10 adding as much as 40% to a small business insurance policy.¹¹ Similarly, a Fire Services Levy applies in Tasmania, adding up to 28% to a range of commercial insurance policies.¹²

The level of liability insurance cover you choose

In Australia, typical public liability insurance limits are:²

• $5million
• $10million
• $20million.²

Premiums tend to increase with higher levels of cover; but the rise in costs isn’t usually strictly proportional.⁴ In other words, taking out a $10million public liability insurance policy doesn’t usually cost twice as much as a $5million policy.⁴

Which types of small business might need public liability insurance?

Not sure if you need this kind of cover for your small business? While public liability insurance is mandatory for certain occupations in some states and territories,¹ it can be useful for any type of business that interacts face-to-face with customers or the general public.¹³

Can you get public liability insurance if you’re a sole trader?

Yes. Any type of small business can take out public liability insurance if they want to, or need to, including sole traders.¹

What might help reduce the cost of public liability insurance?

Even though you can’t change factors such as your business type or where it’s located, there are still things you can do that might help you manage your small business liability insurance cost, such as:

Choosing an appropriate level of public liability cover

With higher levels of cover potentially equalling higher premiums,⁴ you might want to take steps to avoid paying for a level of cover that isn’t aligned with your actual risk or requirements.¹⁴

For example, a small business with a relatively low risk profile based on foot-traffic volume and business activities might decide to consider a $5million policy.²

However, a $10million or $20million policy could be required if your business has a higher risk profile or if you want to:

• Sign a commercial lease²
• Apply for a local council tender²
• Obtain a council permit, such as an outdoor dining permit.¹⁵

Considering your excess

An excess is the amount of money you would be required to pay if you make a claim on your insurance policy – and choosing a higher one may help to lower the cost of your premiums.⁶

It's worth noting however that a higher excess means you’d need to pay more towards a claim if you make one – and larger excess amounts may be unaffordable for some small businesses.¹⁴

Comparing public liability insurance quotes

Shopping around for your insurance may help you find a better deal.¹⁶

When you are comparing quotes, it may be a good idea to:¹⁷

• Make sure the policies are similar – Check that the features and exclusions of the policies you’re comparing are like for like.
• Check for additional cover – Some insurers may offer optional covers at an additional charge, which might increase premium costs.
• Contact the provider – When you’ve narrowed down your choice to one or two policies, you might like to call the insurer to double check anything you’re unsure of and ask any questions you might have.¹⁷

And, if you’re considering using an insurance comparison site, bear in mind that while they might help to speed up the process of finding and comparing quotes,¹⁸ according to Choice, not all sites are independent.¹⁹ Typically, comparison sites distribute policies from multiple insurers for a commission or fee, whereas Youi sells its own insurance policies directly.

Does Youi Small Business Insurance include public liability insurance?

Yes. “Youi’s Small Business Insurance automatically includes public liability insurance,” says Mervyn Hartley, Youi’s Head of Product – Home and Small Business.²⁰

Product liability insurance is also included as standard with a Small Business Insurance policy at Youi.²⁰ This type of business insurance covers your business if it makes, sells or supplies goods and one of your products injures someone or damages their property.¹

“At Youi, small business owners can choose from three levels of Public and Products Liability cover – $5million, $10million and $20million,” explains Hartley.

“From there, a number of optional covers may be able to be added to a Small Business Insurance policy for an additional cost, such as cover for business items,²¹ business interruption,²² tax audit²² and business property damage.”²³

Now that you know more about how public liability insurance premiums are calculated and why there’s no one-size-fits-all price, we hope you feel better placed to weigh up your options. If you’d like to learn more about the public liability cover provided by Youi Small Business Insurance, consider giving our dedicated Small Business team a call on 1300 010 648 or starting a quote online.

¹Source: Australian Government Business – Types of business insurance, n.d.
²Source: Sprintlaw – Public Liability Insurance Explained: Why Your Business Needs It, February 2025
³Source: Finder – Public Liability Insurance in Australia, March 2026
⁴Source: MBA Financial Strategists – Understanding the cost of public liability insurance, n.d.
⁵Source: Sprintlaw – What is Public Liability Insurance and Do You Need It?, June 2025.
⁶Source: Insurance Council of Australia – ABC’s of General Insurance, n.d.
⁷Source: Australian Government Business – Stamp duty, n.d.
⁸Source: Insurance Council of Australia – Tax Reform, n.d.
⁹Source: State Revenue Office Victoria – Abolition of duty on business insurance premiums, May 2026
¹⁰Source: NSW Government Revenue NSW – Emergency services levy, April 2026
¹¹Source: Insurance Council of Australia – A stronger NSW: Policy recommendations for the next NSW Government, February 2023
¹²Source: Insurance Council of Australia – Fire Services Levy decision will leave Tasmania the last tax standing, February 2024
¹³Source: Business Victoria – Find the right insurance, October 2022
¹⁴Source: Financial Counselling Victoria Inc – Letter to the Federal Primary Inquiry into Small Business Insurance, March 2026
¹⁵Source: Brisbane City Council – Footpath and outdoor dining permits, n.d.
¹⁶Source: Business NSW – Insurance premiums slowly boiling businesses, September 2024
¹⁷Source: Moneysmart – Using comparison websites, n.d.
¹⁸Source: ABC News – Comparison sites won’t always get you the best deal. Here’s why, April 2021
¹⁹Source: CHOICE – The trouble with insurance comparison sites, October 2024
²⁰Public and Products Liability cover automatically included in Small Business Insurance policies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
²¹Business Items cover is optional and an additional cost applies. Conditions, limits and exclusions apply. The most we will pay for each item is $2,500, up to a total of the Business Items amount noted on your policy schedule per claim, unless a High Value Business Items amount is noted on your policy schedule, in which case the most we will pay for all items with a replacement value of more than $2,500 is the High Value Business Items amount shown on your policy schedule.
²²An additional cost applies for optional covers. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
²³Business Property Damage cover is optional and an additional cost applies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.