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Differences between public liability and professional indemnity insurance

Sam Meadows
Written by  Sam Meadows
5 min read
Updated: 25 Mar 2024

Running your own business is stressful enough without the worry of what would happen if something went wrong and a customer made a claim against you. Thankfully, public liability and professional indemnity insurance are there to help. In our guide, you will learn how they work and the differences between the two.

What are the differences between public liability and professional indemnity insurance? 

Both public liability and professional indemnity insurance protect businesses against claims arising from any unintended consequences of their work. 

Public liability insurance is intended to cover claims when a member of the public has been injured or died on the business premises, or for property damage caused by its activities.  

Professional indemnity insurance on the other hand is meant to cover claims around negligent services or advice given to clients that could lead to financial loss. 

Do I need public liability and professional indemnity insurance? 

Both types of cover might be useful to businesses that provide services directly to the public. Without them, a claim from a customer or member of the public could be financially devastating and so cover could provide peace of mind. 

Neither are a legal requirement, although professional indemnity insurance may be a requirement in certain professions or for membership of some professional bodies. Solicitors for example will usually be required to have a minimum level of professional indemnity cover, because of the high risk of a financially damaging claim. 

Public liability cover is not required, but an incident leading to injury or damage could happen at any time, and having insurance will help protect your bottom line. 

How does public liability insurance work? 

Public liability insurance protects your business from a range of unexpected costs. These include compensation claims for injuries to a third party, legal expenses and even the cost of repair if your work has damaged someone’s property. 

It is likely to be very helpful for a large range of businesses. Cleaners might be in a position where they accidentally damage something in a property they are cleaning. An electrician could make an honest mistake and cause an electrical hazard. A hairdresser could accidentally injure a client, leading to a claim. 

In all of these examples, having public liability cover would help. 

You should be aware of what it won’t cover. Injuries to yourself or employees are not covered – and in the latter case employers’ liability insurance might be a legal requirement, depending on the size of your business. While accidental damage is covered, public liability cover will not payout if it is found that the work was negligently carried out or the damage was intentional. 

How does professional indemnity insurance work? 

Professional indemnity insurance is intended to cover claims arising from professional negligence. If you or an employee makes a mistake in your work or provide incorrect advice that causes a client financial loss, then your cover will kick in. 

It could also cover things like defamation claims against your business, or a breach of confidence. Unlike public liability, it will also cover claims related to work carried out by employees. 

Be aware that policies cannot be purchased to cover retrospective claims – it must have been active when the work is carried out.  

While not a legal requirement, you might need it to join a regulatory organisation covering your specific industry. 

Buying professional indemnity and public liability insurance 

Public liability and professional indemnity insurance can be purchased separately according to your needs, but they can also be purchased as a combined business insurance policy. This will often include employers’ liability cover, which could be legally required depending on the size of your business. 

You can get a premium tailored to you by opting for different levels of cover, but you should be aware of the minimum requirements of any professional membership bodies operating in your profession. 

There will also usually be an excess on your policy, which is the amount you pay towards any claim before the insurance cover kicks in.  

Ultimately, even while not (usually) a legal requirement, both types of cover will help give you the peace of mind that if there was a claim against your business, you would be protected and able to continue operating financially. 

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