BUSINESS INSURANCE GUIDE
Professional Indemnity vs Public Liability: what's the difference?
Professional Indemnity and Public Liability are often mentioned together, which is probably why they're so easy to confuse.
BUSINESS INSURANCE GUIDE
Professional Indemnity and Public Liability are often mentioned together, which is probably why they're so easy to confuse.
The simplest way to remember the difference is this: Professional Indemnity is primarily about your professional work, while Public Liability is about injury to other people or damage to their property.
Here's what that means in the real world.
Imagine you're a management consultant and recommend a new operating model. Six months later, the client alleges that your advice caused them £100,000 of financial loss.
That's the sort of allegation Professional Indemnity is designed to address.
Or perhaps you're a designer and a client alleges that an error in your professional work means an entire campaign has to be recreated.
Professional Indemnity can help with eligible claims arising from professional advice, services, errors or omissions. Depending on the policy, protection can also extend to certain claims involving confidentiality, intellectual property, defamation or loss of documents.
Now imagine the same management consultant is visiting the client's office and accidentally knocks over and damages a £5,000 projector.
That's potentially a Public Liability matter.
The same applies if a customer slips at your premises and is injured, or you're working at somebody's home and accidentally damage their property.
Public Liability is designed to help with eligible claims involving injury to other people or damage to their property.
That's probably the easiest way to understand why some businesses need both.
A professional firm can make a mistake in its work and also accidentally damage a client's property. Equally, a trades business might primarily think about Public Liability but also provide designs, specifications or professional advice that create a Professional Indemnity exposure.
It's less about what you call your business and more about the risks created by what you actually do.
Neither Professional Indemnity nor Public Liability is generally compulsory for every UK business, but that only tells part of the story.
A client might require £2 million of Professional Indemnity before signing a contract. A construction site might require a particular level of Public Liability before you can start work. Some professional bodies also require their members to maintain PI.
So the question isn't always simply, “Does the law say I need it?” Sometimes it's, “Do I need it to do the work?”
If someone alleges that your professional advice or work caused them financial loss, think Professional Indemnity.
If someone is injured or their property is damaged because of your business activities, think Public Liability.
Two different risks, with two different types of protection.
