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Public liability v professional indemnity insurance. What’s the difference?

18/11/2013

Understanding the difference between public liability and professional indemnity insurance isn't always easy.

We get asked this question a lot. People suspect they need both types of cover, but they're not sure why.

So if you're unclear about the difference between public liability (PL) and professional indemnity (PI) insurance, you're in the right place. Our Q&A with a client who got his PL and PI wires crossed should help untangle things

Client: PolicyBee, help! I'm really confused. What's the difference between public liability and professional indemnity insurance?

PolicyBee: Righto. Which one would you like to start with?

Client: Um, professional indemnity insurance I think. 

PI insurance

PB:  Well, professional indemnity insurance covers the work you do and any mistakes you make. For example, you might be accused of negligence, or doing something wrong that costs your client money. It pays for the costs of defending you (solicitors are pricey), as well as any other costs such as losses, damages or compensation for your unhappy customer. Does that make sense?

Client: Yes, yes it does. What sorts of things are covered by PI insurance? 

PB: Good question. It covers mistakes, negligence, defamation, intellectual property theft, loss of documents, copyright issues and so on. What's covered exactly depends on what you do and what policy wording you have.

Client: OK, so far so good. But what about public liability insurance? What's that? 

PL insurance

PB: Public liability insurance isn't about the work you do. Rather, it covers you for claims involving injuries to people or damage to property allegedly caused by your business.

Client: Do all businesses need this type of insurance?

PB: If clients visit your work premises, or you regularly visit them at theirs, PL insurance is pretty much essential.

Client: Hmm, I dunno. Sounds pretty much like some kind of accident insurance.

PB: Yep. Got it in one.

Client: Can you give me some examples of the sorts of things it covers? 

PB: Sure. Let's say your client trips over a cable that you left snaking across the floor and breaks their shoulder. They could claim against you for bodily injury. And if they can't work, they'll claim for loss of earnings too.

Your PL insurance covers legal costs and compensation. It's a similar situation if you, say, accidentally spill coffee over your client's computer. The claim for property damage is covered, along with legal fees and any compensation. Sorted.

PI v PL

Client: So, which is more important? Professional indemnity or public liability insurance? 

PB: It doesn't work like that, I'm afraid. If you offer any kind of specialist service or advice, you should seriously consider professional indemnity insurance. Without it, you could lose a serious amount of money if a claim is made against you.

And if you have visits from clients, or you visit them, public liability insurance is equally as important.

Client: If I want to be fully covered, it sounds like I need both?

PB: You said it ...

Client: Yes, I suppose I did.

PB: Don't be too disheartened. If you have professional indemnity insurance already, adding public liability only costs about £3.50 a month ...

Still a bit unsure about the difference between public liability and professional indemnity insurance? Feel free to give us a call on 0345 222 5391 and we'll try our hardest to answer your questions.

Image used under license from Shutterstock.

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