What's the difference between public liability and professional indemnity insurance?

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    Chris Godfrey

    Page written by Chris Godfrey. Last reviewed on June 26, 2024. Next review due April 6, 2025.

    Public liability insurance covers your business for third-party claims for personal injury or property damage caused by the services your organisation provides. Professional indemnity insurance protects your business from compensation claims arising from wrong or misleading information you may have published or provided to a client.

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      How does public liability insurance work?

      Public liability insurance is a type of business insurance that protects your organisation if someone is injured, or their property is damaged because of the services that you or your business provides. This type of cover, also known as PL or liability insurance, is designed to protect your company against third party claims for injuries or property damage from a customer or client, passer-by, or a visitor to your business premises – including building sites – whether you’re at fault or not.

      Do I need public liability insurance?

      If your business operations put your organisation in a position where your work could cause a customer, client, supplier or a passing member of the public (even in or on a vehicle) to suffer injury or damage to their personal property, then yes, you need PL to protect your business against the potential of crippling financial claims. Additionally, some customers may demand that you have public liability insurance before doing business with you.

      What does public liability insurance cover?

      Public liability insurance protects your business from financial loss if someone is injured, or their property is damaged because of the work that you or your business provides. 

      What’s covered:

      • Personal compensation – for the injury or death of a third party, including the loss of earnings and future loss of earnings
      • Medical fees – including the cost of calling out an ambulance, treatment and a stay in hospital for the claimant
      • Repairs – including the cost of labour and materials
      • Legal costs – including the cost of defending you against a claim and the claimants’ legal costs if you’re found to be at fault

      What’s not covered:

      • Accidents that affect your employees or their possessions – if you employ anyone, you must have employers’ liability insurance by law. This covers anything that might happen to your employees
      • Accidents that happen to you or damage to your own property – protection for yourself or your business premises is usually covered under a general business insurance policy

      How does professional indemnity insurance work?

      Professional indemnity insurance – also known as professional liability insurance – covers businesses and individuals that advise clients, help them navigate complex financial or legal affairs, or provide them with vital information that may be published in the media. Professional indemnity (PI) can protect you if a client makes a financial loss because of fault in your work or advice and then makes claim against your business. 

      Do I need professional indemnity insurance?

      If you offer knowledge, skills or advice to clients and customers – either as a self-employed individual or for a company – then yes you do. The potential cost of claims arising from any errors in the services you provide can far outweigh the cost of the policy. Typical cover will range from £1million to £5million, but the amount of cover you need will vary depending on your profession, your clientele, and the type of information and services you provide. 

      Be aware that some professions are required by their trade bodies or guilds to have professional indemnity insurance in place. This includes:

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

      Additionally, many other types of business expose themselves to claim because their work is published in the media, provides industry-standard guidelines, or has legal and political impact. Businesses and occupations most at risk include:

      • Journalists and authors
      • Publishers
      • Advertising and PR agencies
      • Entertainment businesses
      • IT contractors
      • Design agencies
      • Research facilities
      • Web developers
      • Some educational institutions

      Important tip: You can be held liable for providing bad or misleading information or services even if you or your organisation provided them for free.

      What does professional indemnity insurance cover?

      Professional indemnity insurance is designed to cover a range of issues that may arise from the information, skills and services you or your business provides:

      • Professional negligence – this is also known as ‘breach of duty of care’. Professional indemnity insurance covers you in the event that a client suffers loss or damage because of faulty advice.
      • Defamation – to defame someone is to make a false statement or do something that harms their reputation or casts their character in a bad light. Journalists, authors, TV reporters and even some celebrities, such as stand-up comedians, are most at risk from this type of claim. 
      • Breach of confidence – covers you in the event that a client or customer claims they have suffered loss or damage because you have shared their confidential information without their permission.
      • Breach of copyright – covers you from claims that state you have utilised copyright protected intellectual property (IP) – typically manuscripts, plans, drawings, patents, etc – without the original author’s permission. Note that you do not have to have re-used the IP for financial gain to be at risk. 
      • Lost or damaged documents – protects you in the event that a client or customer claims they have suffered financial or other loss because you have lost or damaged their important documents through accident or lack of care.
      • Employee cover – covers your business from liability claims made because of fraud or dishonesty by your employees or any sub-contractors, consultants and freelancers you have hired to work on a project. 

      Can I have public liability and professional indemnity insurance at the same time?

      Yes. For many UK SMEs, sole traders and the self-employed, having both public liability insurance and professional indemnity cover is essential.

      How Swoop can help

      All business involves risk, but that doesn’t mean you have to suffer the consequences if things go wrong. Don’t let an accident become a catastrophe for your business. Contact Swoop today to compare top-quality public liability cover from different providers and to discuss all your insurance needs. 

      Written by

      Chris Godfrey

      Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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