Every business that has any interaction with the public should carry public liability insurance. But for motor trade businesses — where customers routinely enter hazardous workshop environments, where vehicles move constantly through busy forecourts, and where the products and services provided can have direct safety consequences — public liability is one of the most critical covers in your programme. Understanding exactly what it covers, what its limits are, and how much you actually need is essential.
What Motor Trade Public Liability Covers
Public liability insurance covers your legal liability for:
Bodily injury to third parties — a customer who slips on oil in your workshop, a visitor struck by a moving vehicle on your forecourt, a pedestrian injured by a vehicle driven by one of your staff. Third-party bodily injury claims can be extremely costly — involving medical costs, income loss, pain and suffering, and long-term care costs.
Property damage to third parties — a customer's personal belongings damaged during a workshop visit, a neighbouring business's property damaged by a fire from your workshop, a third party's vehicle damaged during a road test or vehicle movement.
Product liability — claims arising from products you have sold (vehicles, parts, tyres) that cause injury or property damage to third parties after leaving your premises.
Legal defence costs — even if you successfully defend a claim, legal fees can be substantial. Public liability covers your defence costs as well as any resulting award.
What Public Liability Does NOT Cover
Your own employees — injuries to your employees are covered by ACC in the first instance, and by employers' liability for consequential claims not covered by ACC. Public liability is specifically for third parties.
Your own property — damage to your own workshop, tools, or equipment is covered under property insurance, not public liability.
Customer vehicles in your care — damage to a customer's vehicle while it's in your workshop is covered under customer vehicles cover (bailee's liability), not public liability. These are frequently confused.
Professional errors and workmanship — a faulty repair that causes a customer financial loss is a professional indemnity claim, not a public liability claim. The distinction matters because the policy wordings and triggers are different.
Intentional acts — deliberate damage or injury is not covered.
The Coverage Overlap Problem
One of the most common insurance mistakes in the motor trade is assuming that public liability and professional indemnity overlap, and that having one means you're covered for the other's scenarios. They don't overlap — they're complementary:
Public liability → physical injury or property damage to third parties from your business operations
Professional indemnity → financial loss to clients from your professional work or adviceBoth are needed. A customer who trips and breaks their arm in your workshop is a public liability claim. A customer whose engine fails because of your negligent servicing is a professional indemnity claim.
How Much Public Liability Does Your Business Need?
$2 million — the minimum standard for most motor trade businesses. Adequate for smaller operations with limited foot traffic and lower-risk activities.
$5 million — appropriate for car dealerships with significant customer foot traffic, multi-bay workshops with multiple staff, or any operation where the public regularly accesses the premises.
$10 million or more — advisable for large dealership groups, preferred insurer repairers, businesses with commercial vehicle clients, or any operation where a single catastrophic incident could exceed $5 million in claims.
The cost difference between $2 million and $5 million in public liability is often modest — typically a few hundred dollars per year. The additional coverage is significant. Defaulting to the minimum because it's cheaper is a false economy.
Location-Specific Risk Factors
Where you operate affects your public liability exposure and premium:
High foot traffic locations — dealerships on busy main roads with frequent customer visits have higher exposure than rural workshops with appointment-only service.
Workshop layout — open workshop bays accessible to visiting customers create higher slip/fall exposure than workshops with a reception area that separates customers from the work area.
Outdoor exposure — forecourts and open yards where vehicles move create pedestrian risk that enclosed workshop environments don't have.
Age of building — older buildings with uneven surfaces, limited lighting, or outdated infrastructure have higher trip hazard profiles.
Your insurer will want to understand your premises and operations at inception. Accurate disclosure helps ensure you're adequately rated and that there are no coverage disputes at claim time.
Speak with a Specialist Broker
Motor trade public liability is not a commodity product. The right limit, the right coverage extensions (products, completed operations, advertising liability), and the right policy wording depend on the specific nature of your business. A specialist motor trade broker can structure your public liability as part of a comprehensive trade package — eliminating coverage gaps and ensuring your premium reflects your actual risk profile.