When deciding on what insurance to purchase, its good practice to consider the risks that could impact you and make your decisions based on the most appropriate protection available to meet your requirements. Two insurance covers that can often cause confusion are Public Liability and Professional Indemnity.Whilst both of these covers protect your business against legal action and compensation awards to third parties, they are actually designed to offer different forms of protection in your business activities.
One of the key differences between the covers offered is around the nature of the work that you carry out. If a third party suffers injury or damage to their property as a direct result of any physical work you undertake then Public Liability would protect you, whereas Professional Indemnity would protect you for third party injury or damage if the risk is linked to your professional duty when providing design, advice or a service for a fee.
What is Public Liability?
Public Liability is there to protect your business against the financial risk of for death, bodily injury or damage to property suffered by any third party including members of the general public or other business you work with. The levels of cover available normally start at £1 million.
Examples of scenarios where you would be protected by Public Liability Insurance;
• A carpet fitter accidentally breaks an antique vase when bringing carpet into the house.
• A visitor, tripping over loose carpet in reception, twists their knee requiring surgery and months of physiotherapy.
• A plumber damages a pipe, which leaks into a business’s server room – not only causing thousands of pounds worth of property damage but the resulting damage means the business is unable to carry out work for several weeks.
• A builders scaffolding doesn’t have sufficient safety netting and one of his employees slips and drops his tools, which then injures an innocent bystander waiting for a bus.
Public Liability is not a compulsory requirement for most business’s, however, it is becoming increasingly important that small businesses protect themselves from the risks that are presented when they come into contact with the public and other businesses.
Public Liability should be an important consideration for every business
What is Professional Indemnity?
Professional Indemnity insurance is to cover your legal liability for the advice and design that you provide, on the basis that this advice, design is given in a professional capacity. Professional indemnity also ensures protection against liability for breach of professional duty that you may face when providing a service for a fee.
For example, if a client disputes work you have undertaken for them, professional indemnity insurance will cover the cost of defending any claim in addition to covering any compensation or damages that are awarded up to the limit you have selected.
Examples of scenarios where you would be protected by Professional Indemnity Insurance;
• An architect designs a new building for a customer but during construction major design flaws are discovered leading to it being demolished and work having to start again
• Financial advice given by an Accountant leads to the customer suffering financial loss
• Kitchen fitter finalises the installation but it doesn’t match the customers agreed plans. The customer decides to sue for damages
• A new IT installation for a major customer is delayed which loses them business. The freelance Project Manager is indicated in the delay for planning deficiencies and is then sued
Professional indemnity insurance is typically regarded as essential cover for landscape architects, computer consultants, consulting engineers, marketing and PR agencies, project managers, accountants, lawyers and photographers — Insurantz professional indemnity insurance is available for many trades and professions.
Next time you buy your business insurance policy hopefully you can now more easily identify the risks and exposure facing you and your business to Public liability and Professional Indemnity. This was brought to you by Insurantz.com, online small business insurance specialists. For more information without any obligation contact us on 0845 408 1800.
The purpose of this article is to give general information only and should not be construed in any way as advice.