Public liability insurance begins where your operations meet the public.

What public liability insurance covers

Public liability insurance responds to the insured's legal liability to pay damages for third-party bodily injury or third-party property damage arising from the business operations or the premises, together with the legal costs of defending the claim. The two elements matter equally. Defence costs in a contested liability matter can be substantial even where the claim ultimately fails, and a policy that funds the defence is doing real work long before any damages are agreed.

The word legal is the operative one. The policy responds where the business is legally liable - not simply where something unfortunate happened on its premises. A visitor who trips over their own feet in a well-maintained aisle has no claim against the business, and the policy is not a general accident fund for anyone injured on site.

What the section does not cover is equally important. Injury to the insured's own employees falls under COIDA and employers' liability, not public liability. Damage to property in the insured's own care, custody or control is normally excluded and needs a separate extension. Poor advice or professional services are the domain of professional indemnity. Faulty workmanship itself is generally excluded, though resulting damage may respond. Contractual liability assumed beyond what the common law would impose is usually restricted.

Exposures that need to be identified separately:

• Products liability - harm caused by goods after they have been supplied.
• Care, custody and control - damage to third-party property in the insured's possession.
• Tenants' liability - damage to leased premises for which the tenant is responsible.
• Defective workmanship - the distinction between the faulty work itself and the damage it causes.
• Contractual liability - indemnities given to landlords, clients, principals and tenders.
• Pollution and environmental impairment - generally excluded beyond sudden and accidental events.
• Employers' liability - employee claims that fall outside the statutory COIDA framework.

The legal basis: delict, negligence and wrongfulness

South African liability is founded principally in the law of delict. To succeed, a claimant must ordinarily establish a wrongful act or omission, fault in the form of negligence or intent, factual and legal causation, and loss. Negligence is assessed against the standard of the reasonable person: would a reasonable person in the defendant's position have foreseen the harm, and would they have taken reasonable steps to prevent it?

Wrongfulness carries particular weight where the claim arises from an omission - a failure to act rather than a positive act. South African courts do not impose a general duty to prevent harm to others. Liability for an omission arises where the legal convictions of the community demand it, and that is most readily established where the defendant controls a dangerous situation, has created the risk, occupies premises to which the public is invited, or holds a statutory duty.

For a business open to the public, that combination is present routinely. It controls the premises, it invites people onto them, and it creates the activity that generates the risk. The practical consequence is that the reasonableness of the precautions actually taken - and the evidence that they were taken - becomes the central issue in most third-party claims.

Occupiers' liability: premises, maintenance and evidence

An occupier of premises to which the public has access owes a duty to take reasonable steps to guard against foreseeable harm. That duty extends to the physical condition of the property, to hazards created by the activities carried on there, and in appropriate circumstances to hazards created by others whose presence the occupier permits.

Slip and trip claims illustrate how this is decided in practice. In supermarket and shopping centre litigation the courts have consistently focused not on whether a spillage occurred - spillages are inevitable - but on whether the occupier had a reasonable system for detecting and dealing with them, and whether that system was in fact operating on the day. A documented inspection schedule with completed records is a defence. An undocumented practice that everyone agrees was usually followed is considerably weaker.

This is why liability defence is largely won or lost before the incident. Cleaning rosters, inspection logs, maintenance records, signage placement, lighting checks, security patrol records and CCTV retention periods are the evidence on which reasonableness is judged, and they cannot be reconstructed after a summons arrives.

Premises evidence that supports a liability defence:

• Dated inspection and cleaning logs with the name of the person who signed them.
• Maintenance records for floors, stairs, lifts, walkways, lighting and parking surfaces.
• Hazard signage placement records and photographs.
• Incident register entries completed on the day, with witness details.
• CCTV retention long enough to cover the period in which a claim is likely to be intimated.
• Records of contractor access, induction and supervision.

The Consumer Protection Act and liability without negligence

Section 61 of the Consumer Protection Act 68 of 2008 changed the position materially for any business that supplies goods. It imposes liability on the producer, importer, distributor and retailer for harm caused by supplying unsafe goods, by a product failure, defect or hazard, or by inadequate instructions or warnings - and it does so irrespective of whether negligence is present.

Two features make this significant. The claimant does not have to prove that anyone was careless, which removes the most difficult element of a conventional delictual claim. And liability is joint and several across the supply chain, so a retailer can be pursued for a defect introduced by a manufacturer it has never dealt with directly.

Section 61 recognises defences, including where the defect is wholly attributable to compliance with a public standard, where the defect did not exist when the goods were supplied, or where it is unreasonable to expect that the distributor or retailer could have discovered it. But the starting point is unfavourable to the supplier, and the practical answer is a products liability section with a limit that reflects the volume and nature of what is sold, supported by batch traceability and recall planning.

Source: Consumer Protection Act 68 of 2008, section 61 (liability for damage caused by goods).

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Contractors, principals and OHSA

Contractors are the single most common source of unexpected liability. A business that engages a contractor may find itself joined to a claim arising from the contractor's work, particularly where it directed the work, supervised it, controlled the site, or is fixed with a statutory duty in respect of it.

The Occupational Health and Safety Act 85 of 1993 is central here. Section 8 places a general duty on every employer to provide and maintain a working environment that is safe and without risk to health. Section 9 extends that duty to persons other than employees who may be affected by the employer's undertaking. Section 37(2) allows an employer and a mandatary to regulate their respective duties by written agreement, and the Construction Regulations impose specific obligations on a client appointing a principal contractor.

The insurance consequences follow directly. Whether the contractor carries its own public liability cover, at what limit, whether the principal is noted as an additional insured or holds a cross-liability clause, whether waivers of subrogation are in place, and whether certificates are actually collected and diarised for renewal are all matters to be documented before work starts. An indemnity given by a contractor with no insurance behind it is worth what the contractor is worth.

Source: Occupational Health and Safety Act 85 of 1993, sections 8, 9 and 37, read with the Construction Regulations, 2014.

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Choosing a limit of indemnity

Public liability limits are not set by reference to the value of the business. They are set by reference to the worst credible outcome of its activities. A small operation that invites the public onto its premises, or that works at a client's site, can generate a claim far larger than its own balance sheet.

Serious bodily injury drives the largest South African awards. General damages, past and future medical expenses, and loss of earning capacity for a young claimant with a permanent injury combine into figures that routinely exceed several million rand, before defence costs. Multiple claimants from a single incident compound it.

Three structural points are frequently missed. Whether the limit applies per event or in the annual aggregate determines whether a second claim in the same year has any cover behind it. Whether defence costs erode the limit or sit in addition to it can materially change the amount available to a claimant. And contractual requirements - leases, tenders, supply agreements and service contracts commonly stipulate a minimum limit - should be collected and checked against the limit actually held, because a shortfall is both an insurance gap and a breach of contract.