Public liability insurance
This page provides general information on public liability insurance for associations incorporated under the Associations Incorporation Act 1984. References to the Act refer to this legislation, which is administered by the Office of Fair Trading.
What is public liability insurance?
This is insurance under which the insurer agrees to indemnify the insured for legal liability owed to another person who suffers loss or damage by reason of the insured's activities.
The question of whether the association should obtain public liability insurance (or any other type of insurance) will be dictated by the particular activities undertaken by the association. Associations should seek their own advice as to the types and amounts of insurance required by their association.
Top of pageIs the association required to hold public liability insurance in order to remain incorporated?
Prior to 10 May 2002, incorporated associations were required to maintain public liability insurance.
On 10 May 2002, the Associations Incorporation Regulation 1999 was amended to remove the statutory obligation of associations to take out and maintain public liability insurance. Those amendments included replacing rule 34 of the model rules for associations. Rule 34 of the model rules now provides:
"34 Insurance
The association may effect and maintain insurance."
Does the association have to change its rules if it does not intend to maintain public liability insurance?
The effect of section 19(2)(b) of the Act is that when an association adopts the model rules, they adopt them as they are from time to time. This means the change to model rule 34 applies to any association that has adopted the model rules without the requirement for the association to pass a special resolution to amend its rules.
If an association has adopted its own rules or the model rules with changes, it will need to check the rules to see what their rules say on this matter and pass a special resolution to change them, if necessary.
Does this mean the association does not have to have insurance?
The removal of the statutory obligation to effect public liability insurance does not affect the liabilities or rights of the association with respect to injuries or damage to property. In particular, it does not mean that associations may not be subject to public liability claims.
The decision whether to take out public liability insurance is now one for the association to make, taking into account relevant risk factors.
What do I do if I cannot obtain public liability insurance or if the premiums are too high?
A number of insurance companies have insurance products that may be suitable for community organisations.
The NSW Council of Social Service (NCOSS) undertakes an insurance program to assist non-government community service organisations to identify their insurance and risk management needs.
NCOSS may also be able to provide information concerning 'bulk buying' insurance programs for community service organisations.