Many small businesses only discover insurance exclusions after a claim has been denied. This article explains the most common exclusions in professional indemnity and public liability insurance, how they affect small businesses and what you can do to reduce the risk of unexpected coverage gaps.
Professional indemnity (PI) and public liability (PL) insurance are essential protections for Australian businesses — but neither policy covers every scenario. If you assume your insurance 'just covers it', exclusions can leave you exposed to significant financial and legal risk.
- Professional indemnity insurance (PI) covers claims arising from errors, omissions or negligent professional advice. It is an essential form of protection for any business that provides a service and covers an extremely broad range of professions, from architects to hairdressers — in case a client or customer makes a claim of professional misconduct, malpractice or failure of duty in providing a professional service.
- Public liability insurance (PL) covers claims for personal injury to the public or damage to their property, caused by your business activities. It is an essential protection for businesses that interact with any members of the public. It covers legal costs and compensation if you're found responsible for accidents that happen at your premises or as a result of your work.
Some exclusions apply across both policies, while others are specific to one. We've clearly identified which exclusions affect PI, PL — or both.
PI and PL policy exclusions to be aware of
Common exclusions that can affect both PI and PL insurance
- Prior known circumstances
- Intentional or fraudulent acts
- Fines and penalties
- Insolvency and trade debt losses
Professional indemnity insurance exclusions small businesses often miss
- Contractual liability beyond professional duty
- Claims outside your defined professional services
- Incidents outside the policy period (claims made cover) which occurred before or after the dates covered by the policy
- Work performed without the required licensing or registration
The above list isn't exhaustive — you may encounter other types of exclusions in the PI or PL policies offered by different insurers. Gallagher insurance brokers are experts in policy wordings and can advise clients on where and when exclusions may apply.
Small business PI example
Public liability insurance exclusions to be aware of
- Damage to your own property
- Product recall and product guarantee claims
- Asbestos, pollution and high risk activities
Small business PL example
How small businesses can reduce the risk of insurance gaps
With expert broker advice and effective insurance and risk planning, reduce the potential for insurance exclusions to create unexpected impacts on your business. Key areas to address include:
- Review exclusions at every renewal, not just the premium.
- Ensure that your professional services description matches what you actually do.
- Check contracts for liability clauses that may fall outside policy cover, especially when signing new client contracts.
- Understand which risks require policy extensions or separate insurance policies.
- Leverage the services of an insurance broker to gain expert advice and insights into insurance coverage conditions and factors relevant to your business.
Access comprehensive coverage — talk to a business insurance expert
Understanding the exclusions and limitations of insurance cover is vital for protecting your business from potential gaps in coverage. Connect with our team of insurance experts to gain valuable advice about insurance policy coverage to best protect your business when renewing or taking out new business cover.
Last updated 8 April 2026
