Public Liability vs Professional Indemnity insurance 

One of the questions we’re most often asked is the difference between public liability insurance and professional indemnity insurance.

Both types of cover protect you in the event of compensation claims against your business. Despite this, there are important differences between the two types of policy. Some businesses may need one type of cover, while others may require both.

In this article, we explain what public liability and professional indemnity insurance covers, how they differ, and which policies you’re likely to need.

• What is the difference between public liability and professional indemnity insurance?
• What does public liability insurance cover?
• What does professional indemnity insurance cover?
• Can I get both public liability and professional indemnity insurance?

What is the difference between public liability and professional indemnity insurance?

Put simply, public liability insurance covers you against legal action by a member of the public who has been injured or who has had their property damaged as a result of your business activities.

In contrast, professional indemnity insurance covers you against claims for damages or costs related to professional negligence or incorrect advice.

What does public liability insurance cover?

Public liability insurance cover varies from policy to policy. However, most policies protect you against claims in four main areas:

Property damage. This is damage to a third party’s property by you, your employees, or anyone working under your supervision. For example, if a workman accidentally backed a van into a customer’s garden wall and damaged it, this would be covered.

Slips, trips, and falls. This covers you against claims made by anyone injured at your business premises. For example, if a visitor tripped on a recently mopped floor and broke their arm, you’d be covered by a public liability policy.

Disrepair. This is when disrepair causes injury to a third-party. Examples could include missing floor tiles, exposed electrics, or protruding nails that cause injury.

Public liability insurance will pay out any financial sum the courts decide, along with legal costs and damages, up to your policy limit. These could include things like medical fees or the cost of repairing or replacing property.

It’s important to note that public liability insurance only covers you against injury and damage claims made by members of the public. To protect yourself against similar claims made by your employees, you need employer’s liability insurance. If you employ one or more members of staff or volunteers, this cover is a legal requirement.

Do I need public liability insurance?

In most cases, public liability insurance is not a legal requirement. However, if your business teaches horse riding, operates aircraft, or works in railway construction, this type of insurance is compulsory. It’s also worth noting that some trade associations require members to have public liability insurance before they can register.

Public liability insurance is a wise investment if people visit your business or participate in (or watch) events you have organised. Some examples of businesses that would be well advised to get public liability cover are:

• Sole traders. If you work for yourself and you interact with members of the public, public liability insurance is extremely important. Any claim against you could seriously damage or even wipe out your business and personal finances.
• Holiday let owners. With the rise in popularity of short-rental holiday homes, largely thanks to sites such as Airbnb, public liability insurance for holiday lets protects you against claims made due to the injury or death of your guests or damage to their property.
• Landlords. If you have tenants, public liability insurance for landlords is also important. According to the Royal Society for the Prevention of Accidents, the home is the most common location where an accident happens. Taking out public liability insurance is an important safeguard.

What does professional indemnity insurance cover?

Professional indemnity insurance covers you if you or your business provide incorrect advice or are professionally negligent. It’s also known as errors and omissions insurance.

‘Professional negligence’ can cover a wide range of scenarios that could cause loss or damage to your client.

These might be:

• Incorrect or misleading advice, leading to your client suffering financial detriment or material distress / inconvenience.
• Missing an agreed deadline, resulting in costs or consequences for your client.
• Breaching confidentiality, such as by sharing sensitive information that belongs to your client.
• Actual or alleged defamation, such as communication that injures a third party’s reputation.
• Infringing copyright, trademarks and intellectual property.
• Losing records or documents belonging to your client.

If a claim is brought against you, your insurer will either work with you to defend it or appoint a solicitor or a claims manager to handle the case. In some instances, a Loss Adjuster will work with you to negotiate a settlement.

In some situations, professional indemnity won’t cover you. This is particularly true if you do something illegal or intentionally wrong, such as misleading a client.

Do I need professional indemnity insurance?

Professional indemnity insurance is not a legal requirement. However, you may find that it’s needed before being awarded certain contracts. In addition, some occupations are required to have this cover by their professional bodies or regulators. These include:

• Accountants
• Architects
• Chartered surveyors
• Financial advisers
• Solicitors
• Some healthcare professionals

That said, if you provide clients with advice or services, it’s sensible to make sure you have cover. Businesses of this kind might include:

• Estate agents. Professional indemnity insurance for estate agents can cover you against everything from misrepresentation to employee dishonesty.
• IT consultants. Professional indemnity insurance for IT consultants is vital, protecting you against data protection errors, programming issues, software failure, and more.
• Design & marketing agencies. In this sector, it’s all too easy to inadvertently breach copyright, especially with the advent of AI. The right insurance will cover you against this and other types of professional negligence.
• Advertising agencies. Sometimes, an advertising campaign will backfire spectacularly, damaging a client’s reputation. For this reason alone, the right professional indemnity insurance is essential.

If you’re unsure whether you need this kind of insurance, look at our article on the benefits of professional indemnity insurance.

Can I get both public liability and professional indemnity insurance?

You can get public liability insurance and professional indemnity insurance on a combined policy, but they are typically sold as separate policies. Whether you need both depends on your business type and activities. To discuss your options and secure the best cover for your needs, speak to a member of the Alan Boswell Group team today.

Alan Boswell Group is an award-winning insurance broker with a reputation for putting its customers’ needs first. To get in touch, call us on 01603 216399.