Walk onto any construction site in Australia and someone will ask about your insurance. Not whether you have it — they assume you do. What they want to know is how much. And the answer you give — five, ten, or twenty — determines whether you get on site or get sent home.
Public liability cover in Australia comes in three standard tiers: $5 million, $10 million, and $20 million. The premium difference between the lowest and highest is often surprisingly small — sometimes less than $300 a year. So the logical question is: if the extra cover costs so little, why wouldn’t everyone carry $20 million?
The answer gets into what these numbers actually mean, who’s demanding which level, what claims actually cost, and when you’re overpaying for cover nobody needs. This guide unpacks all of it.
What These Numbers Actually Mean
A $5 million public liability policy doesn’t mean every claim pays $5 million. The cover amount is the maximum the insurer will pay across all claims arising from a single incident — and typically across the entire policy period.
The distinction matters. If three separate incidents occur during your policy year, each generating a $2 million claim, a $5 million policy would be under serious strain. You’d have $6 million in claims against a $5 million cap. This is why higher limits exist — not because individual claims usually exceed $5 million, but because the total exposure across a bad year can.
In practice, the vast majority of PL claims settle below $1 million. Claims above $5 million are rare. Claims above $10 million are rarer still. The table below shows the rough distribution of Australian PL claims by size, based on industry data:
- Under $100,000: The bulk of claims. Slips and falls with minor injury. Small property damage. These claims are common but financially manageable.
- $100,000 to $500,000: Moderate claims. Fractures requiring surgery. Water damage to commercial property. Legal costs mounting alongside damages.
- $500,000 to $2 million: Significant claims. Permanent injuries affecting earning capacity. Major property damage from fire or structural failure.
- $2 million to $5 million: Serious claims, typically involving catastrophic injury or death. Multiple claimants from a single incident. These are the claims that test a $5 million policy.
- Above $5 million: Rare. Catastrophic injury with lifelong care requirements. Major industrial accidents. Multiple fatalities from a single incident.
- Above $10 million: Extremely rare. Large-scale disasters. Class actions.
Understanding this curve is key to choosing your cover level. You’re not insuring against the likely outcome — you’re insuring against the tail risk. The question is how far into the tail you need to go.
$5 Million: The Australian Baseline
Why $5 Million Became the Standard
$5 million became the default PL cover level in Australia not because of any law requiring it, but because of commercial convention. When insurers first standardised PL products decades ago, $5 million emerged as the round number that covered most plausible claims without making premiums unaffordable for small businesses. From there, it embedded itself in contracts, leases, and licence conditions.
Today, $5 million is what you’ll see written into most:
- Commercial leases for small tenancies
- Standard client contracts for small to medium businesses
- Market stallholder requirements
- Venue hire agreements
- Low-risk trade licences
Who $5 Million Is Right For
$5 million is sufficient for most Australian businesses, including:
- Sole traders in lower-risk trades: Painters, tilers, plasterers, floor installers working on residential and light commercial projects
- Home-based consultants and professional services: Bookkeepers, graphic designers, copywriters, virtual assistants
- Small retail shops: Low foot traffic, no food or alcohol service
- Cleaners and mobile services: Domestic cleaning, gardening, pet care
- Photographers and creatives: Studio-based or location work with minimal equipment risk
- Personal trainers and fitness instructors: Outdoor or studio-based, small class sizes
For these occupations, the premium is affordable — often $250 to $750 per year — and the likelihood of a claim exceeding $5 million is genuinely remote. If nobody in your commercial relationships is asking for more than $5 million, and your work doesn’t involve catastrophic risk scenarios, $5 million is almost certainly enough.
When $5 Million Isn’t Enough
There are situations where $5 million is not sufficient, even for a small business:
- You work on or near strata-titled properties. Body corporates almost universally require $20 million, and $5 million won’t get you through the door.
- You work at heights or with structural elements. A scaffolding collapse or retaining wall failure can injure multiple people and generate claims that easily exceed $5 million.
- You handle hazardous materials. Asbestos, chemicals, fuel — incidents involving these can generate environmental cleanup costs alongside injury claims.
- Your client is a government department or major corporation. These entities standardise on $10 million or $20 million and won’t negotiate down.
- You work in high-value environments. Airports, ports, data centres, hospitals — property values and business interruption costs are high enough that a $5 million cap might not be enough.
$10 Million: The Growing Middle Ground
Why $10 Million Is Becoming More Common
$10 million PL cover is steadily replacing $5 million as the practical minimum for a growing number of Australian businesses. Several forces are driving the shift:
Larger clients standardising on higher requirements. Government panels, major builders, and corporate procurement teams have been progressively raising their minimum PL requirements. Where $5 million was the standard a decade ago, $10 million is increasingly the new floor.
Property values and claim inflation. A building that cost $2 million to replace 15 years ago might cost $5 million today. Medical costs, rehabilitation expenses, and legal fees have all risen. A claim that would have settled for $3 million a decade ago might settle for $6 million now.
Strata and body corporate pressure. Body corporates managing multi-million-dollar buildings increasingly demand $20 million, but even those “only” requiring $10 million are becoming more numerous.
Who $10 Million Is Right For
$10 million is worth serious consideration if:
- Your client contracts demand it. If you’re a subcontractor to a tier-two builder, a contractor to state government, or a supplier to a large corporation, $10 million is often specified as the minimum.
- You work in moderate-risk trades. Electricians, plumbers, carpenters doing structural work — the claims potential is higher than for a painter or cleaner.
- You employ multiple staff. More people working under your business means more opportunities for things to go wrong, and the aggregate claims across a bad year can add up.
- You work on commercial or industrial sites. The property values and business interruption costs at these sites justify higher cover.
- The premium jump is small for your occupation. If $5 million costs $600 and $10 million costs $700, the extra $100 buys a meaningful expansion of cover. At that price, it’s hard to argue against.
The Premium Economics
This is the key point most business owners miss: the premium jump from $5 million to $10 million is almost always smaller than you’d expect. Because most claims don’t approach either limit, the insurer’s additional exposure is modest. A sole trader tradie might pay $50 to $200 extra per year for double the cover. A consultant might pay $30 to $80 extra.
If that premium gap fits your budget, it’s worth asking yourself: is there a credible scenario where a claim against my business could exceed $5 million? If the answer is even “maybe,” the extra premium buys a lot of peace of mind.
$20 Million: When You Need the Top Tier
Who Actually Needs $20 Million
$20 million PL cover isn’t for everyone. It’s specifically relevant if:
- You work on strata-titled properties. This is the single most common reason sole traders and small businesses end up carrying $20 million cover. Body corporates managing apartment buildings, commercial strata, and mixed-use developments almost always specify $20 million as the minimum. If you’re a plumber fixing a leak in a high-rise, a painter working on common property, or a cleaner servicing a strata-managed building, you’ll probably need $20 million.
- You contract to government. Commonwealth, state, and local government contracts routinely specify $20 million PL cover. Some also require $20 million in professional indemnity if your work includes advice or design.
- You’re a head contractor or principal contractor. If you’re the one hiring subcontractors and managing the site, your exposure is higher because you’re liable for their actions as well as your own.
- You work on major infrastructure projects. Transport, energy, water, defence — the scale of these projects and the potential for catastrophic incidents justify high cover levels.
- You’re in a high-risk trade at scale. Roofing at commercial scale. Demolition. Major earthworks. High-voltage electrical. Large-scale plumbing and gas. The worst-case scenario in these trades genuinely exceeds $10 million.
When $20 Million Is Overkill
For many Australian businesses, $20 million is more cover than they’ll ever need. A home-based bookkeeper doesn’t need $20 million in PL cover. A graphic designer working from a co-working space doesn’t need it. A domestic cleaner who never works on strata properties doesn’t need it.
The premium difference for these low-risk occupations might be $50 to $100 extra — but if nobody in your commercial world is asking for $20 million and your risk profile doesn’t justify it, that’s money better spent elsewhere. Upgrade your professional indemnity cover. Add portable equipment insurance. Put the difference toward actual business expenses.
The strata exception: Even low-risk occupations need $20 million if strata work is involved. The body corporate doesn’t care that you’re “just” cleaning or “just” painting. Their insurance requirements apply uniformly. If strata work is part of your business, factor $20 million cover into your costs before you quote.
How to Decide: A Practical Framework
Start with what’s being demanded of you. Review your lease, your client contracts, your venue agreements, and any licence conditions. Write down the highest cover amount anyone requires.
Then look at what you actually do. If your work involves heights, heavy machinery, structural elements, hazardous materials, or large numbers of people — consider stepping up a level from what’s minimally required.
Finally, consider the cost. Get quotes at multiple cover levels and look at the actual dollar differences. If the jump from $5 million to $10 million costs you $80 and adds meaningful protection, it’s probably worth it. If the jump from $10 million to $20 million costs $400 and nobody’s asking for it, it might not be.
The right cover level is the one that satisfies your contractual obligations, reflects your actual risk profile, and fits your budget. It’s rarely the same answer for two different businesses.
Frequently Asked Questions
Is the premium difference between $5M and $20M really that small?
For most occupations, yes. A sole trader painter might pay $550 for $5M, $630 for $10M, and $750 for $20M. The percentage jump looks significant, but the dollar amount — $200 across the full range — is modest. In higher-risk trades, the gap is wider: a builder might pay $1,200 for $5M, $1,600 for $10M, and $2,200 for $20M.
Can I increase my cover mid-policy?
Most insurers allow mid-term adjustments, including increasing your cover level. You’ll pay a pro-rata premium for the remaining policy period. If a new contract suddenly requires $20 million, you don’t need to wait until renewal.
What if I have $10M cover but a client asks for $20M?
You have two options: upgrade your policy (and pay the difference) or buy a top-up policy that sits above your existing cover. Both are possible. Talk to your insurer or broker about the more cost-effective option for your situation.
Do I need the same cover level for every job?
Yes — your PL policy applies to all work you do during the policy period at whatever cover level you’ve purchased. You can’t carry $20 million for one client and $5 million for another on the same policy. If you do work that legitimately requires different levels, discuss it with your broker.
What’s the maximum PL cover you can buy?
Above $20 million, PL cover typically becomes bespoke — arranged through specialist brokers rather than standard online platforms. Cover levels of $30 million, $50 million, and $100 million exist for large-scale commercial and industrial operations.
How do I know if $20 million will actually be enough for a catastrophic claim?
For most Australian businesses, even high-risk ones, $20 million is sufficient to cover the worst plausible outcome. The scenarios that exceed $20 million — major industrial disasters, mass-casualty events — are rare enough that they’re priced into the reinsurance market rather than standard business policies. Unless you’re operating at genuinely large scale, $20 million is a reasonable ceiling.
Disclosure: This article contains general information only and does not take into account your individual circumstances. It is not financial advice or legal advice. Cover levels and premiums vary by insurer, occupation, and individual risk profile. You should read the Product Disclosure Statement (PDS) for any insurance product before making a purchase decision. This site may earn a commission if you purchase insurance through affiliate links, including BizCover. This does not affect the price you pay.