Public Liability Insurance and Professional Indemnity Insurance

Public liability and professional indemnity insurance: get covered for your public business and the services you provide.

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Both public liability and professional indemnity insurance cover you and your business for different situations. Public liability protects your business if it operates in public, while professional indemnity insurance covers you if you provide a professional service. For lots of businesses, both are essential.

Compare quotes online and see who has a policy that's best suited to you or keep reading to find out more about their differences.

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What's the difference between public liability and professional indemnity insurance?

The main difference between public liability and professional indemnity insurance cover is this:

  • Public liability. Protects you if someone (a third-party) is injured or their property is damaged in connection to your business. This type of insurance covers you for damages related to physical surroundings and physical property. For example, if a client falls over and suffers an injury while visiting your business's premises, a public liability insurance policy provides cover for any legal costs or compensation you may be required to pay.
  • Professional indemnity insurance. Protects you against claims made by clients if your professional advice or services cause them loss or injury. This can include providing unprofessional advice, failing to exercise required skill or breach of professional duty. None of this is covered by public liability insurance.

Public liability vs professional indemnity: what do I need?

Put simply, you need to consider:

  • Public liability insurance: if your business has a physical premise or operates in public.
  • Professional indemnity insurance: if your job involves you providing a service or advice.

To help you decide which type of insurance you need, let's look at two different scenarios involving Jason, who owns his own medical practice.

Scenario one

Jason prescribes the incorrect medicine and is sued for damages.

  • What insurance is suitable? Professional indemnity
  • How does it work? Professional indemnity insurance is designed to protect you against legal claims for incorrect advice or negligence when performing services.

Scenario two

A client of a patient slips in the bathroom of Jason's practice and sues.

  • What insurance is suitable? Public liability insurance. Any business or person that works in public spaces or deals with the public needs public liability.
  • How does it work? If someone from the public is injured as a result of your business operations, they may claim against your business for being negligent. Public liability is designed to cover this type of 'general' liability.

As the name suggests, professional indemnity cover is designed for professionals who offer advice or a service. If you offer professional advice, design, analysis or consultancy, you should consider taking out this type of cover. Architects, designers, real estate agents and PR consultants are some of the professionals who commonly need professional indemnity insurance. However, as the examples above show, many of us can benefit from having both professional indemnity insurance and public liability insurance.

Public liability cover is important for anyone who has customers or members of the public visit their place of business regularly, or if you visit with clients on site and there is a risk of you damaging their property.

Public liability and indemnity insurance: what do they cover?

We've laid out what both types of insurance cover to help you understand their differences.

Public liability - what's coveredProfessional indemnity insurance - what's covered
  • Damage to someone else's property
  • Personal injury to someone else
  • Advertising liability
  • Products liability (many policies will also include products liability cover which protects you for injuries or damages caused by your products)
  • First aid expenses
  • Breach of duty
  • Breach of privacy or confidentiality
  • Defamation, libel or slander
  • Intellectual property infringement
  • Legal fees
  • Reputation repair
  • Loss or damage to documents

How much public liability insurance does a business require?

Determining an adequate level of Public Liability Insurance to take out will depend on a number of factors including:

  • The nature of your work. Insurance companies will review claims data that has accumulated over the years to assess the likelihood of a claim against your occupation/business occurring.
  • How large your business is. A company with a greater number of staff or higher annual revenue is generally more likely to have a claim made against it. Insurance companies may vary in how they assess the size of the business.
  • Where your business is located. Businesses that carry out their service in areas that are potentially higher risk i.e. airports or mine sites may find that their cost for cover is considerably higher.

If your business is such that you never have to visit a client's premises and very few clients actually come to your location, then you can opt for a more basic level of cover.

An insurance broker can help you secure a competitive policy that provides the right level of cover by helping you determine how much cover you actually need and finding an insurer offering suitable cover.

In order to enable you to get the best quote possible you must be able to give the insurer the most accurate information you can, especially regarding the following:

  • Whether the business could be classified as being high risk or low risk
  • The number of people employed by the business
  • The size of the business with regards to annual turnover
  • What type of business it is
  • If your business is an importer or exporter, what countries does it deal with?

For example, if you run a suburban news agency with only two or three employees your public liability premium will be much lower than a blacksmith with a contract of shoeing horses for a number of leading race horse stables.

Learn more about Public Liability Insurance

How much does professional indemnity insurance cost?

In comparison to other types of insurance such as travel or car insurance, it is not really possible to put a clear price tag on professional indemnity insurance as it will really come down to the individual cover requirements of the professional or organisation. Some key factors that will impact the cost and amount of cover required include:

  • Cover required by regulation. The Regulation and Ministerial Order often determines minimum compulsory cover requirements for different workers and/or organisation to have with principles that they are providing the business for. This will also be determined by the conditions of the agreement negotiated with the principle.
  • Nature of project and likelihood of a claim. Nature of work being undertaken and likelihood of a claim arising out of professional negligence. This involves assessing possible causes of loss, injury or damage through the provision of the business. Insurance providers will reflect on claims data that has been collated to assess the likelihood of a claim occurring.
  • Financial loss. Potential financial loss suffered as a result of actual or alleged breach of professional duty by worker/organisation.
  • Willingness to carry/transfer risk. This is the workers willingness to be exposed to financial loss by accepting a reduced level of cover and control the risk or transfer to other parties.
  • Type of cover. Cost is also impacted by the actual policy chosen by the professional/organisation and any additional cover features that they have selected.
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Professional indemnity and public liability FAQs

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4 Responses

    Default Gravatar
    AngelaAugust 2, 2017

    I am working as a short term educational adviser in the TAFE sector in the Pacific. I have been told I need to get Public Liability and Professional Indemnity insurance. I do not understand why I need public liability as I am working at a TAFE institute.

      Default Gravatar
      ArnoldAugust 5, 2017

      Hi Angela,

      Thanks for your inquiry.

      Professional indemnity insurance applies to individuals and organizations involved in providing services based extensively on personal knowledge and skills.
      It protects your business against claims for loss by a client or a third party if you make mistakes and are found to have been negligent.
      Typically engineers, solicitors, consultants, and accountants carry PII, but many self-employed are also now choosing to have cover if they provide advice, support or contract auditing.

      PII covers claims against an individual for a breach of a professional duty but, depending on the policy, cover can extend to:

      • Misleading and deceptive conduct
      • defamation
      • Breach of intellectual property rights
      • Damages arising from fraud
      • Defence costs associated with claims

      Insured amounts can vary depending on the level of risk to which you are exposed.
      If you think of some project disasters, these sums are not unreasonable.

      Hope this information helped.

      Cheers,
      Arnold

    Default Gravatar
    TonyNovember 28, 2016

    Where, as an Australian company, can I go to find public liability insurance in Chile?

      Avatarfinder Customer Care
      RichardNovember 29, 2016Staff

      Hi Tony,

      Thanks for getting in touch. Many South American countries require insurance to be purchased in that country and you cannot use an international insurance policy, so you will need to look for insurance from a provider in Chile.

      I hope this was helpful,
      Richard

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