Difference Between Public Liability Insurance & Professional Indemnity

Having business insurance is an important part of being an entrepreneur as it protects your company from unexpected costs. Accidents, lawsuits, and weather-related disasters can all put you out of business if you are not adequately protected.  

There are many types of business insurance available and the best cover will depend on your business risk factors. Two policies that are recommended for businesses are public liability insurance and professional indemnity insurance. Discover more about the difference between these two types of business insurance and make an informed decision. 

What is public liability?

If your business has members of the public entering your premises at any time, it is a good idea to have public liability cover. This insurance policy will cover you if someone sues you for injury, illness, or property damage that takes place while they are at your place of business.

Public liability insurance will cover any legal expenses that may arise as well as any compensation that may need to be paid. The general public can include customers, visitors, passers-by, and delivery workers.

What is professional indemnity insurance?

Any company that offers their customers any form of advice or service for a fee will benefit from having professional indemnity insurance.

This professional insurance policy protects business owners from legal claims a client makes against them for negligence or mistakes that may have caused the client to lose money.

Professional indemnity is designed to protect professionals like architects, attorneys, brokers, doctors, or estate agents against clients that feel their services have been inadequate and they launch a legal claim against them.

Public liability insurance vs professional indemnity insurance

 There are many risks faced by businesses today. Among the top five risks globally is the risk a business faces of liability, where an enterprise is sued for loss, death, damage, or injury. Both public liability and professional indemnity insurance can help with the risk management of liability claims. But what are the similarities and differences between these two policies?  

Similarities

• Both policies are a type of business insurance

• Both are designed to protect businesses against legal claims made by third parties

• Both policies are designed to protect companies of any size, including large corporates to small and mid-sized businesses

Differences

• Public liability cover deals with claims made by the public for damages or injury, also known as slips, trips, and falls[1]

• Professional indemnity deals with claims made by clients for professional negligence or an error

How it works – what’s covered?

1. Public liability insurance can include claims made by anyone who visits your business premises. The reality is that any type of accident can happen, and the damages can be costly to your company. Some claims are well known, such as a visitor slipping on a wet floor and hurting their back or a customer tripping on a stair and breaking their wrist. Other mishaps can be a complete surprise and come out of nowhere. For instance, a car involved in an accident on the road outside could hit the wall of your office and injure a client who was standing next to it. 

Public liability insurance would cover the costs of any legal claim made by the injured party. It would pay for your legal defence, any compensation  you may incur, medical costs, and any loss of income that may result.

2. Professional indemnity shields the business from any kind of professional negligence claims. These claims could be made by clients if they believe you or your company has made an error in your work. It also deals with defamation claims, poor advice given to them, or any kind of substandard work. Professional indemnity will cover you for breaches in confidentiality or the loss of any information or documentation.

In certain industries, having professional indemnity insurance is vital to success. In the construction industry, which provides both design and building services, for example, they may need professional indemnity coverage, which protects their own company from errors, as well as any subcontractors hired by the contractor, such as plumbers or architects.

This is because if any mistake is made during the process, such as a bad design leading to a collapse of a load-bearing wall, it can lead to high legal costs trying to defend any claims made by the client. This kind of insurance policy will cover legal costs, compensation payments, and any additional costs needed to fix the error and the loss of income this may cause.  

Who should get professional indemnity or public liability cover?

Almost any type of business needs public liability insurance because it doesn’t matter how careful you are or how well you have tried to mitigate risks; accidents can happen at any time. Even small businesses who don’t have many clients coming to their premises will benefit from this cover.

Professional indemnity benefits enterprises that offer any kind of service to clients. Whether big or small, professional or industrial, any company could suffer a financial loss if a client feels negligence or a mistake has been made. Some industries that require this type of insurance include lawyers, doctors, architects and construction companies, IT specialists or accountants. 

Having only one of these policies probably isn’t enough to fully protect your business, and you will need to take out additional business insurance policies. Your business could benefit from having both public liability and professional indemnity insurance. The two covers complement each other and provide important protection that most businesses need. 

If you’re unsure about what type of insurance your business needs, take a look at our Tips for getting the right business insurance for your job or company. 

Get public liability insurance from Dialdirect

Contact Dialdirect for a business insurance quote today. Let us shield your company from any costly accidents or unforeseen errors with our range of business insurance policies.

Sources:

[1] Gert Nel Incorporated Attorneys: Public Liability Claims 

 Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.