What is the Difference Between Public Liability and Professional Indemnity Insurance?

It can be tough for small business owners to know what type of liability insurance they need and understand the differences between types of insurance. This article provides answers to common questions about which businesses need professional indemnity insurance, which need public liability insurance, and which need both.

What is Public Liability Insurance?

Public Liability Insurance covers you against material damage (i.e. product, equipment, property, etc.) and injury claims that result from negligence on behalf of you or one of your employees. If a third party experiences property damage, bodily injury, or is killed while completing your work, Public Liability Insurance can help you cover the cost of the claim as well as court and legal fees (depending on the terms of your policy).

What is Professional Indemnity Insurance?

Professional Indemnity Insurance covers intangibles, such as financial loss due to faulty design, poor advice, data leaks, or unintentional copyright infringement. Also, if you face legal action after a client finds custom-made content or software unsatisfactory, you'll be glad for professional indemnity cover. Professional Indemnity Insurance helps you cover legal fees and the cost of the claim and will also help you cover compensation you may owe due to damages (again, please check your cover details to establish exactly what you’re covered for).

Which Type Of Insurance Do I Need?

Public Liability Insurance is especially important for businesses that work with physical products or directly interact with the public, such as tradesmen and manufacturing companies. That said, many businesses will not work with you unless you can show them proof of Public Liability Insurance, making it a valuable asset for most businesses. Those who manufacture products or sell food should also consider products liability insurance which covers businesses against damage caused to their customers or their property by defective or dangerous products.

Professional Indemnity Insurance is essential for businesses such as professional consultants, architects, lawyers, accountants, digital agencies, software developers, business analysts, and marketing companies. However, even tradesmen will want Professional Indemnity Insurance to cover accidental loss of sensitive documentation, information leaks and the risk of giving poor advice.

We cover these types of insurance as a package under the title of Professional Liability Insurance, which also includes libel and slander coverage and product liability coverage. Our policy also protects businesses that work from home within the UK. In all cases, your claims are handled by our experienced in-house claims team.

For more information please visit our Simple Guide on Professional Liability or visit our page on trade-specific insurance advice. If you have any questions, we're happy to help.

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