What is the difference between Public Liability Insurance and Professional Indemnity Insurance?

Public Liability Insurance is a small business insurance policy designed to protect your business from potential financial risk for death, injury or property damage that was caused in the or was due to a direct  occurrence in connection to your business activities.  Professional Indemnity Insurance has a different type of cover.  First we will show you an example of public liability insurance.

Public Liability Insurance

For example if a visitor inadvertently tripped over loose carpet in your reception area that caused the visitor to twist his knee and required surgery and months of rehabilitation, those costs may be sought under a public liability insurance claim.

Public liability insurance covers legal liability for claims arising out of personal injury or property damage that was a result of an occurrence in connection your business activities. The public liability insurance policy can be  “triggered”  by the cause of the claim defined in the clauses of your policy most often by personal injury or property damage.

Professional Indemnity Insurance

Professional indemnity insurance is to cover your legal liability for the advice and design that you provided gave in a capacity.

Professional indemnity insurance 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.

When an individual takes up academic training to become a professional and distinguishes himself as  a professional it is expected by the public which would include your clientele you are an expert in your chosen field and therefore to be relied upon expertise. This is your “professional” duty, best exampled by ensuring that any advice you provide is dependable and beneficial to the customer. Any inaccuracy in giving this advice or your exclusions in providing complete advice should be protected by professional Indemnity insurance.

Another example might be if a kitchen fitter finalises installation but the client points out that these were not the agreed plans. Since client is unsatisfied with the end result he decides to sue for damages.

There can be a certain overlaps between public liability insurance and professional liability insurance. These can be  addressed in most policies by policy exclusions. With any liability insurance this differentiators are at times vague. Public/products liability policies at times have forms of professional services exclusion, as with professional indemnity policies also include exclusions pertaining to personal injury or property damage claims, unless derived out of  a breach of professional duty.

Do not forget that the teams at Professional Insurance Brokers are happy to help you with your small business insurance quotes, if you are in Australia, just call 1300 profin (or 1300 776 346) and our staff will help you get a better deal for your business insurance.