Public Liability versus Professional Indemnity: What's the Difference?

Choosing the right insurance is vital to maintain financial security, a good reputation and peace of mind. The correct cover can help protect you and your business from unexpected losses and the often-harsh ramifications of legal claims.

When it comes to public liability versus professional indemnity insurance, there can often be some confusion. Understanding the difference between the two is important to fully protect your business in the event of a professional mistake, property damage or injury to a third party.

Understanding public liability insurance

Public liability insurance protects businesses against injury or property damage claims by third parties. It covers legal defence fees, compensation and medical expenses from accidents that occur because of your business activity and when you are at fault.

The types of risks covered include:

• Slips and falls
• Accidental damage to property
• Injuries caused by faulty products

Public liability insurance can be helpful for public-facing businesses. Retail stores, restaurants, construction companies and event organisers are just a few businesses it can benefit. If your business interacts with the public regularly, public liability insurance could be a wise investment.

Understanding professional indemnity insurance

Professional indemnity insurance protects businesses and individuals against claims of negligence and errors in professional services or advice. It covers legal defence costs and any compensation awarded to the claimant.

Claims often involve financial loss due to things like:

• Incorrect advice
• Miscalculations
• Failure to deliver promised services

Professionals who would benefit from professional indemnity insurance include consultants, accountants, lawyers and IT professionals. Essentially, anyone in an advice-giving or service-based role in which clients rely on your expertise.

Key differences between public liability and professional indemnity insurance

The key distinction in the public liability vs professional indemnity comparison is that the former deals with physical accidents and damage, while the latter addresses professional errors and negligence. Both offer financial protection for legal defence and but involve different risks and claim types.

Public liability insurance

Covers claims from third parties for injury or property damage because of negligent business activities. For example, if a customer slips in a store, public liability insurance handles the claim.

Professional indemnity insurance

Protects against claims of negligence or errors in professional services. For instance, if an accountant provides incorrect advice causing financial loss, professional indemnity insurance covers the legal and compensation costs.

How to choose the right insurance for your business

When choosing the right insurance to protect your business, you must consider a few important factors.

• Consider the nature of your business, industry standards and the level of risk associated with your business activities. Identify any financial or legal vulnerabilities you might face in your field.
• It’s always wise to consult with insurance professionals for tailored advice. They can help you understand policy details and recommend suitable coverage. The more you know, the more protected your business should be.
• Combining different insurances can offer protection over several areas. Regularly review and update your insurance to ensure it meets changing business needs.

Public liability insurance and professional indemnity insurance from Towergate

Choosing the right insurance is crucial for your business’ stability. It can keep your business assets safe and secure in the event of a legal claim made by a third party.

Regularly reviewing and updating your insurance is vital for continued protection as your business evolves. Consulting with insurance professionals helps tailor coverage to your specific needs.

Looking to keep your business running smoothly? We offer both public liability and professional indemnity insurance.

Get a public liability insurance quote 

Contact us for a public liability insurance quote today, either online or by phone on 0330 818 9929.

Get a professional indemnity insurance quote 

Get in touch with Towergate for a professional indemnity insurance quote suitable for your profession today.

If you are a tradesperson, you can get a direct quote online or call us on 0330 123 5741.

About the author

Alison Wild BCom (Hons), FMAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a Fellow member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has 20 years' experience as a residential landlord.

The information contained in this article is based on sources that we believe are reliable and should be understood as general information only. It is not intended to be taken as advice with respect to any specific or individual situation and cannot be relied upon as such.