Professional insurance
with a personal touch
We're here to help
0345 222 5391
Mon-Fri, 9am-5pm, local rate & mobile friendly

What is professional liability insurance?

01/08/2011

Finally understanding the differences between professional liability insurance and other insurances can feel like escaping a maze.

Business insurance is riddled with incomprehensible terms and never-ending jargon.

For example, hands up who knows what ‘indemnity to principals’ means? Who can tell us what happens if your policy has a ‘material damage warranty’ on it? Answers on a postcard please …

Words of wisdom?

Just knowing what kind of professional insurance to ask for has its fair share of problems. To illustrate the point, have a look at this list:

  • Professional liability insurance
  • Personal indemnity insurance
  • Errors and omissions insurance
  • Professional indemnity insurance
  • Public liability insurance

They’re all the same thing aren’t they? After all, they sound pretty similar.

Well no, they’re not all the same thing. But the fact they sound so similar causes considerable confusion.

Professional liability & co explained

In fact, only four of the insurance types listed above are real: professional liability insurance, errors and omissions insurance, professional indemnity insurance and public liability insurance. Personal indemnity insurance was a red herring (although, tellingly, we do still get asked for it).

Of the four real policies, one protects you against claims of physical damage to people and property (public liability insurance) and the other three protect you against claims of professional negligence.

The difference depends on which side of the Atlantic you’re on: errors and omissions insurance and professional liability insurance are American terms for what we in the UK call professional indemnity insurance.

Confused?

The right end of the stick

So why does this matter?

Well, first, it’s important you know what type of professional insurance you need.

That might sound obvious but, if you’re not sure what you’re after, it’s easy to end up with public liability when what you actually wanted was professional indemnity.

Second, it highlights a wider point. If you’re not sure what the words mean, how do you know what cover you have?

You don’t have to spend hours trawling through glossaries and jargon busters to get up to speed. The quickest and easiest option is to ask a knowledgeable broker to explain it to you instead.

And we’ll be happy to. Although if you ring up and ask us straight off 'What is professional liability insurance?', we might ask you in return if you've been watching too much American TV.

Image used under license from Shutterstock.

If you liked this, you might like thesethis...

Recruitment consultant insurance: do you have the right cover?
Did you know some recruitment consultant insurance covers the people you place for the work they do, and some doesn't? Find out what sort you have here.
Insurance for tradesmen. What do you need?
Insurance is the tool tradesmen need to protect their business. But what cover should they choose? And what does it do? Find out…
Spotlight on insurance for freelance photographers
With your kit, your business, and your reputation to protect, insurance is a must for freelance photographers. Here's what you need...

More Advice, News & Know-how

Sign up to being prepared and protected

Get reliable advice on protecting and fine-tuning your business or charity sent straight to your inbox. Plus, receive other occasional bits we think you'll enjoy, like competitions and offers. We promise not to swamp you, and you can unsubscribe easily.

Sign up to being prepared and protected

Get reliable advice on protecting and fine-tuning your business or charity sent straight to your inbox. Plus, receive other occasional bits we think you'll enjoy, like competitions and offers. We promise not to swamp you, and you can unsubscribe easily.