Public Liability Insurance and Incorporated Associations in NSW

Anne Farr is a volunteer and Marie-Louise Symons is a Casual Legal Officer at Arts Law


This article provides an overview of recent changes in NSW for incorporated associations with respect to public liability insurance.  Initiatives with respect to public liability insurance in Queensland from September 2002 onwards are also outlined.

New South Wales

In May 2002 the NSW Government did away with the requirement for incorporated associations to obtain public liability insurance as a prerequisite to incorporation.

Section 44 of the Associations Incorporations Act 1984 (NSW) used to require associations to have public liability insurance for the amount prescribed in the Associations Incorporation Regulation 1999, set at $2,000,000.

The Department of Fair Trading instigated the change in response to an increasing number of concerns voiced by associations regarding their public liability insurance policies. They were finding that insurers were refusing to insure new associations, renew existing policies or were dramatically increasing their premiums. For many associations, which the Department considered were at an almost non-existent risk of physical injury, for example, book, knitting and quilting clubs, the obligation to effect public liability insurance was becoming too onerous.

What does this mean?

Although incorporated associations in NSW are no longer required to have public liability insurance, this does not mean that associations are immune from public liability claims.

Members of an association, and particularly committees, should therefore consider the association’s potential for liability, taking into account the activities of the association and how the risk of injury or harm to members of the public can be minimised.

Committees also need to be bear in mind their obligations under associations legislation, such as the duty to act with honesty and reasonable diligence in the carrying out the affairs of the association, and the general law of torts, which concerns the law of negligence and imposes a duty of care towards others in certain circumstances.

A failure to obtain public liability insurance in circumstances where it would be reasonably expected may be a breach of the committee’s legal obligations for which both the association and committee members could find themselves liable.

The Rest of Australia

The changes in New South Wales this year, have brought it into line with almost all the other states and territories in Australia, which leave public liability insurance up to the discretion of the association.


Queenslandhas, however, been more proactive in this area, with the State government appointing international insurance broker, AON Risk Management Services, to co-ordinate a scheme that allows not-for-profit organisations to overcome their difficulties in obtaining public liability insurance due to the current insurance climate.

In March 2002, the Government called for interest from not-for-profit organisations in participating in a group insurance scheme. It then collated a database of those organisations expressing interest and awarded its administration to AON, who then selected an underwriter, Suncorp Metway.

John Tippett, Divisional Director of AON, states that, so far, organisations in the lower risk categories, for example, arts and crafts co-operatives, have obtained cover, while those in high risk categories, that is, those running fetes or carnivals, will be able to obtain cover from Suncorp from 1 October 2002.

More information for Queensland organisations is available from AON (

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