Are Public Liability And Professional Indemnity Insurance The Same Thing?
By: K D Garrow
The only type of business insurance that is compulsory is employers liability cover. This has to be in place so that your employees are properly protected. There are, however, other insurances that as a business owner you should give very careful consideration to. Almost any type of business ought to have public liability cover in place, because this relates to possible claims for damages by third parties.
Very few types of business can say that they do not have any interaction at all with any third party which could potentially lead to a claim. If you work outside of your home or if you ever visit clients or anyone ever comes into your place of work, then the potential exists for causing damage to a person or their property. These claims are what public liability insurance is designed to protect you against.
Professional Indemnity Insurance on the other hand is slightly different, though is often purchased in conjunction with third party liability protection. Professional indemnity cover is intended to guard against other types of possible claims against your business in connection with the professional services your business provides. This type of policy is required if you provide professional advice or services in a professional capacity. The insurance is a intended to safeguard you in the event that the services or advice you provide are shown to be negligent.
In other words, you will be covered for claims for any losses suffered by a client as a result of acting on your advice or services you have provided. If you are an accountant or lawyer it is compulsory for you to have this insurance in place, but other than that, the most obvious examples of the types of business that will require this cover are areas like consultants, architects, designers, surveyors or engineers.
There are all sorts of possible scenarios that could arise with regard to claims under professional indemnity, but the kind of things that you will be covered for are to do with being negligent or in breach of your duty of care, misrepresentation or a negligent statement or the infringement of a third party's intellectual property rights. Cover can also protect you against any act of wilful dishonesty on the part of any staff employed by your company or affiliated with it in some way.
While professional indemnity is all about claims arising as a result of advice or services that you provide in the course of your business, Public liability insurance is more to do with damages to property or injuries to people as a result of your business activity. Rather than being about losses as a result of the professional services you provide, this is more to do with accidents that arise as a result of you carrying out your business.
These can relate to anyone, not just clients or people directly involved in the work you are doing. Obvious examples are things like working at height outside a building and dropping a tool on someone walking past in the street below. It could also, however, relate to the property of a third party, such as someone getting wet paint all over their expensive coat because you forgot to put a sign up, or someone tripping over a piece of equipment you left on the ground and smashing their valuable laptop.
So public liability and professional indemnity insurance are closely related, but are not the same thing. For the majority of business it will make good sense to have adequate cover for both types in place.