When you’re running a small business, amid answering emails, managing stock and daily operations, it can only take a split second for the unexpected to happen: a customer tripping over a power cord, or a costly error slipping into the professional advice you’re paid to provide.
And, with so many tasks to juggle and hats to wear, organising the best type of small business insurance for the unique risks your business might face may feel like an afterthought sometimes – and a confusing one at that.
Those fleeting afterthoughts may include whether your business needs public liability insurance or professional indemnity insurance? Which type of insurance covers what? How exactly do they differ? And is it possible that you might need both types of policies depending on the business you’re in?
Whether you’re in start-up mode or have been in business for a while and are reviewing your current level of cover, we’ve put this guide together to help clear up any confusion you might have – and to provide information so you can make more informed decisions and hopefully avoid a business insurance mistake.
What’s the difference between public liability insurance and professional indemnity insurance?
The short story is that, while similar in nature, they provide cover for different business risks:
- Public liability insurance. This covers your business if someone gets injured, dies or their property gets damaged because you were negligent.1
- Professional indemnity insurance. This helps cover professionals in many industries against civil liability claims made in relation to the advice or services they provide.1,2
So, in practise, public liability insurance might cover a cabinetmaker whose customer gets injured on a tour around their manufacturing premises, while professional indemnity insurance may cover an architect whose design error has resulted in additional building or rectification costs.
Who needs public liability insurance?
Public liability insurance may be useful for any business that interacts with people face to face, including if customers or members of the general public visit your business or if you routinely visit customers’ premises.2
Is public liability insurance mandatory?
It can be. Some business types need public liability cover regardless of where they operate in Australia, while for other occupations, it’s a mandatory part of licensing requirements in certain states and territories.3,4
Plus, most commercial lease agreements list public liability insurance as a necessary requirement,5 while local councils typically need it to be in place before they’ll issue certain permits, including outdoor dining permits for hospitality businesses.6,7
But, even if it’s not mandatory in your industry or required to obtain a council-issued permit or lease agreement, you might still find yourself the subject of a legal claim if someone is injured or their property gets damaged as a result of your business. Without insurance, the cost of that could close some small businesses down.8
Who needs professional indemnity insurance?
Professionals who provide a service or give advice may need professional indemnity insurance.1,2
Is professional indemnity insurance mandatory?
Yes, for some professions, having professional indemnity insurance is mandatory.1
For example, tax agents, certified practising accountants and real estate agents are legally required to have professional indemnity insurance,9-11 as are lawyers and architects.12,13 Doctors, allied health professionals and midwives, meanwhile, require a specific type of cover, called medical and midwife professional indemnity insurance.14
You can check with your professional association to find out about the specific requirements or options for your industry.1
What other types of business insurance are there?
There are several other types of business insurance – and they’re all designed to cover different risks compared to public liability and professional indemnity insurance.1 Here’s a brief overview of what three other common types of business insurance cover.
Product liability insurance
If your business makes, sells or supplies goods, this insurance type covers you if one of your products causes injury to someone or damages their property1 – even if you just repair or service those products.2
Workers compensation insurance
If your business employs staff, it’s compulsory to have workers compensation insurance.1 It covers employees if they are injured or become sick due to work and can pay for their medical expenses as well as their wages while they’re not working.15
This type of insurance is available from the workers compensation regulator in your state or territory:1
- ACT: WorkSafe ACT
- NSW: State Insurance Regulatory Authority
- Qld: WorkCover Queensland
- SA: ReturnToWorkSA
- Vic: WorkSafe Victoria
- WA: WorkCover WA
- Tas: WorkSafe Tasmania
- NT: NT WorkSafe1
Business vehicle insurance
If your business owns vehicles – be that a van to deliver goods, a trusty ute if you’re a tradie, or a food truck to run your catering business from – you’ll need Compulsory Third Party (CTP) insurance.1 This covers injuries to people caused by car accidents and is a mandatory requirement before you can register a vehicle.16
You might want to consider additional business car insurance too, to cover damage to your work vehicles – and to other people’s cars or property if you’re involved in an accident that’s your fault.16
What does Youi Small Business Insurance cover?
“Youi’s Small Business Insurance automatically includes public liability insurance and product liability insurance as standard,” says Mervyn Hartley, Youi’s Head of Product – Home and Small Business.
“Business owners can choose from three tiers of business liability cover – $5million, $10million and $20million.
“From there, a number of optional covers can be added to a Small Business Insurance policy, for an additional cost. One of the options we offer qualifying businesses is professional indemnity cover.”
Other optional covers you can choose to add at Youi include cover for:
- Business interruption – If you operate from a fixed premises and an unexpected event forces you to temporarily close your doors, this may help cover your lost profit and extra operating costs.17
- Business property damage – Under this option, contents and/or stock in trade at your business premises may be covered for loss or damage caused by events such as fire, storm, flood or theft. Stock in trade is also covered while it’s in transit to or from your business, and refrigerated food is covered for deterioration.18,19
- Business items – This option offers cover for loss or damage to your portable business items, including electronic devices, tools of trade, and even some mobile machinery.20
- Money – Your business cash can be covered for loss or damage with this optional cover.21
- Glass – You can add cover for loss or damage to the glass you’re responsible for at your business premises, such as windows, even when you’re leasing.22
- Tax audit – This option provides cover for the professional fees and charges you might face if your business is audited.17
Public liability and professional indemnity insurance FAQs
Now that you know the basics of how public liability insurance and professional indemnity insurance work, you might have some specific follow-up questions. Here are the answers to three common queries we get asked.
Do some businesses need both public liability and professional indemnity insurance?
Yes. If a business interacts with clients or customers – or members of the public – in person and is also involved in providing a professional service or advice, then it’s possible that both types of insurance might be necessary.1,2
I run my business from home – do I need public liability insurance?
Maybe. If your customers or the general public visit you there – or you regularly visit your customers’ premises – then you might want to consider exploring public liability insurance cover.2
My product damaged someone’s property – is that covered by public liability insurance?
No – that’s what products liability insurance is for.1
“At Youi, products liability cover is automatically included, along with public liability insurance, as part of our Small Business Insurance,” says Hartley.
Figuring out the exact types of insurance that would suit your small business best may feel like piecing a complex puzzle together, especially when terms such as “liability” and “indemnity” are thrown into the mix. But hopefully, understanding the distinct differences between public liability and professional indemnity insurance makes it simpler to work out what you and your business might need.
If you’d like to learn more about the public liability and professional indemnity cover provided with Youi’s Small Business Insurance, consider giving our team a call on 1300 010 648 or starting a quote online.
Public and Products Liability Insurance issued by Youi Pty Ltd. Consider the Small Business Insurance PDS and TMD to decide if this product is right for you.
1 Source: Australian Government – Types of business insurance, n.d.
2 Source: Business Victoria – Find the right insurance, October 2022
3 Source: Qld Government WorkSafe – Licensed electrical contractors, March 2025
4 Source: Building and Plumbing Commission – Insurance requirements for licensed plumbers, November 2020
5 Source: APNL Accountants & Advisors – 5 Clauses Tenants Should Look For When Reviewing a Lease, n.d.
6 Source: Brisbane City Council – Footpath and outdoor dining permits, n.d.
7 Source: City of Sydney – Outdoor dining guidelines, July 2025
8 Source: Victorian Chamber of Commerce and Industry – Public liability insurance for SMEs: Do you need it?, February 2026
9 Source: Australian Government Tax Practitioners Board – Professional indemnity insurance, April 2026
10 Source: CPA Australia – Professional indemnity insurance, n.d.
11 Source: Australian College of Professionals – Professional Indemnity Insurance, n.d.
12 Source: LawyersWeekly – Top-up time: Don’t get caught short with your professional indemnity insurance, May 2025
13 Source: Australian Institute of Architects – Professional Indemnity Insurance Basics, October 2025
14 Source: Australian Government Department of Health, Disability and Ageing – About medical and midwife professional indemnity insurance, March 2024
15 Source: Australian Government Fair Work Ombudsman – Workers compensation, n.d.
16 Source: Moneysmart – Choosing car insurance, n.d.
17 An additional cost applies for optional covers. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
18 Business Property Damage cover is optional and an additional cost applies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
19 Loss or damage caused by flood, storm or bushfire within the first 72 hours of your policy commencing is only covered in limited circumstances.
20 Business 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.
21 Money cover is optional and an additional cost applies. Conditions, limits and exclusions apply. The most we will pay for each claim is the insured value for your business’s money. For full details, see the PDS & Policy Wording.
22 Glass cover is optional and an additional cost applies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
