Although they are often mistaken for each other, public liability and professional indemnity are not the same type of insurance. One covers a business for certain aspects that the other will not, and vice versa. At Brightside Public Liability Insurance, we have put together this simple guide to help you understand the difference between public liability and professional indemnity insurance so you can more easily determine which insurance type your business needs - if not both.
The Difference Between Public Liability and Professional Indemnity
Both insurances cover your business for compensation claims made against you. Public liability insurance covers claims made in the event of your business being sued by a Third Party for Property damage or personal injury. On the other hand, professional indemnity insurance covers compensation claims made against your business as a result of errors, omissions or “bad advice” given in the course of your business conducting or completing work. Some customer contracts will also require you to evidence that you have Public Liability or Professional Indemnity insurance in place, before you begin any relevant or associated work.
While both Public Liability and professional indemnity insurance are not normally a legal requirement there are times they can be depending on what type of business you run. For example, riding schools, Nuclear power installations and any work involving dangerous animals legally need Public Liability in place. If you are a solicitor or financial adviser, or run an accountancy firm or architectural company, your respective professional bodies may require professional indemnity insurance due to the nature of your work. This can also apply to some healthcare professionals, who may need to take out a type of professional indemnity insurance called Medical Malpractice Insurance.
Additionally, public liability and professional indemnity insurance often have different cover limits, with the former’s limits typically being higher. While professional indemnity insurance policies usually have a cover limit of somewhere between £50,000 and £5 million, public liability policies are often with cover limits between £1 million and £10 million.
What Public Liability Insurance Can Cover
Public liability insurance can cover your business in the event of the following being made against you by members of the public:
- Injury compensation claims
- Property damage compensation claims
- Any legal fees that are incurred as a result of the above compensation claims
For example, if one of your employees is vacuum cleaning your shop floor and a customer were to trip over the cable and break their arm, your business could face a compensation claim.
Public liability insurance is therefore recommended for businesses that regularly deal with members of the public. Shops, restaurants and salons are just a few of the businesses that would likely feel a greater peace of mind with a public liability insurance policy in place.
What Professional Indemnity Insurance Can Cover
Professional indemnity insurance can cover your business for compensation claims made against your business by clients due to mistakes such as the following:
- Professional negligence
- Errors or Omissions
- Bad Advice
- Instances of libel or defamation
For example, if one of your employees fails to do their due diligence before offering financial advice which results in your client losing money, your business could be open to a compensation claim from the client.
As such, professional indemnity insurance is often recommended for businesses that provide services or advice to others. It is especially recommended if you are a self-employed solicitor, architect, or in a similar occupation.
So, now that you know the difference between public liability and professional indemnity insurance, have you determined that your business needs one of these insurance types? If so, explore Brightside’s Public Liability and/or Professional Indemnity Insurance pages and see how you can achieve peace of mind for your business by getting a quote today.