What’s the difference between public liability and professional indemnity insurance?
Confusion is sometimes caused here, because professional indemnity can also be referred to as professional liability. This is different from public liability. Basically, it goes like this:
- Public liability insurance covers your business for claims against injury or illness caused to clients and members of the public, or damage to their property.
- Professional indemnity insurance/professional liability covers your business for claims against professional mistakes or negligence that end up causing your clients to lose money.
While both are valuable means of cover for UK businesses, having public liability insurance or professional indemnity insurance isn’t a legal requirement.
How does public liability insurance work?
Public liability insurance covers claims against your business if a member of the public (which could be a customer, client, supplier or passerby) is injured, becomes ill or their property is damaged as a result of your business activities. It can also cover the cost of legal fees and compensation payments as a result of the claim.
- A customer suffers food poisoning from something they ate in your restaurant or pub
- You forget to put up ‘wet floor’ signs and a customer slips and injures themselves
- A client trips and falls on a raised flagstone while visiting your business premises
- You accidentally spill hot coffee over a client’s brand-new laptop during a business meeting
How does professional indemnity insurance work?
Professional indemnity can cover for claims made against your business for professional negligence or mistakes you’ve made which causes a customer or client to lose money or damages their reputation.
- A tax consultant fails to tell clients about tax relief available
- An employee leaves documents containing sensitive client information on a train
- A solicitor offers the wrong legal advice
- A project is delayed causing a client’s budget to overrun
- A marketing company implements a bad business strategy causing a client to lose valuable business
Do I need professional indemnity insurance?
Professional indemnity insurance isn’t a legal requirement, but some industry bodies and regulators will insist you have it.
For example, it’s usually expected in sectors where you offer a service, like solicitors, designers, accountants and business consultants. But it can also be a valuable type of insurance for a wide range of trades and industries. If you sign a contract and guarantee a duty of care to customers or clients, you should consider professional indemnity protection.
It would also help protect your business financially, for any legal costs and compensation payments it would be liable to pay, if a successful claim was made against it.
Can I take out both?
Absolutely. If your business offers a service based on your skills, knowledge and expertise, and also has a premises where members of the public visit, both types of insurance can provide total peace of mind that your business is protected.
Let’s say you’re an accountant who works from home with clients who visit you for meetings and appointments. Professional indemnity can cover your business for claims against professional negligence while public liability can protect your business if an accident occurs on your property and injures a client.
Are the cover limits for public liability and professional indemnity the same?
The cover limits tend to be different and the amount you’ll need can depend on the type of business you run.
Cover limits for professional indemnity usually range from £50,000 up to £5 million. Public liability cover is usually between £1 million and £10 million.
Did you know?
If you want to work with a government or local authority, they will usually insist you have at least £5 million of public liability cover before offering you a contract.
Is business insurance the same as public liability?
The term business insurance is a general term used to cover a whole range of risks specific to your business.
Public liability is a type of business insurance, as is professional indemnity. But they’re not the only ones. For example, if you employ staff, you’ll need to take out employers’ liability insurance. Unlike other types of business insurance, this is a legal requirement, even if you only employ one person.
You can buy public liability and professional indemnity cover as separate policies or combine them into a single business insurance package with other types of cover you might need.
Depending on the type of business you run, a business insurance package might include:
- Product liability if someone is injured or their property damaged by a faulty product you sold them
- Commercial buildings insurance covers damage to the property if you own the building where your business is located
- Business contents insurance covers business essentials such as equipment, furniture and, in some cases, stock
- Business interruption insurance covers loss of income if your business has to close for a period of time due to something like your premises being flooded. However, this type of insurance won’t typically cover for pandemics. Make sure you fully understand what interruptions your business will be covered for before signing up for a policy.
The list could go on, but whatever your trade or profession, you can find an insurance package that’s tailored to the specific needs of your business.
Find out more about the different types of business insurance you might need.
Where can I compare business insurance?
Whether you need public liability, professional indemnity, both or more, you can easily compare business insurance here at Compare the Market.
Start a quote with us and we’ll help you compare different types of business insurance at competitive prices.
Why pay more than you should to protect your business? Compare with us today and see if you can save.