Public Liability vs. Professional Indemnity insurance: What’s the difference?

They are two of the most common types of business insurance, but do you really know what they are protecting you from? Let’s take a look at these two different forms of cover and how they can protect your business.

What is Public Liability insurance*?

Public Liability Insurance is designed to provide protection for you and your business in the event a customer, supplier or a member of the public are injured or sustain property damage as a result of your negligent business activities.

If your business interacts with third-parties in any capacity then this is an important form of cover to consider.

What is Professional Indemnity insurance*?

Professional Indemnity protects you against losses claimed by a third–party due to alleged or actual negligence or errors in your professional services or advice.  Your Professional Indemnity insurance will meet the associated compensation payable to a third –party together with your defence costs (which can include legal costs, investigator costs and expert fees).

Do I need Public Liability insurance?

These are some examples of when a small business needs to consider protecting their business with Public Liability insurance.

  • Occupations such as Consultants/Contractors/ Tradespeople 
  • Businesses that have clients visiting their home or out and about meeting clients
  • Businesses that have an office, showroom, shop or any premises
  • Any kind of business that interacts with customers or the public

Recommended reading: Do I need Public Liability Insurance?

Do I need Professional Indemnity insurance?

Professional Indemnity insurance is an important form of cover to consider for:

  • Anyone who provides professional advice or services to a business or individual
  • Contractors looking to work for the government and many organisations required to have cover to be awarded a contract

Some of the typical types of professions that take out Professional Indemnity insurance include: Health Professions, IT Contractors, Management Consultants, Accountants, Estate Agents etc.  For some professions holding professional indemnity insurance is a pre requisite for registration and/or association membership.

Recommended reading: Do I need Professional Indemnity Insurance?

Public Liability insurance: what is typically covered and excluded?

Public Liability insurance provides compensation for:

  • personal injury suffered by a third–party (e.g. a customer, supplier or member of the public)
  • damage to property owned by a third–party due to your negligent business activities
  • legal and defence costs associated with a covered claim

Many public liability policies also provide cover for product liability. Product Liability insurance* protects your business against claims by third parties relating to property damage or personal injury allegedly caused by your products.

The following are not typically covered by Public Liability insurance:

  • Injuries to your employees
  • Damage to your own property
  • Costs of rectifying faulty workmanship
  • Professional negligence
  • Contractual liability
  • Events occurring before or after the policy period

Professional Indemnity insurance: what is typically covered and excluded?

Depending on the type of Professional Indemnity insurance you take out, your policy could cover:

  • Payment of compensation as a result of a claim, including but not limited to Court awarded damages
  • An award of legal costs against you
  • Reasonable legal costs incurred in defending or responding to the claim
  • Claim investigation costs
  • Disciplinary proceeding costs

Professional Indemnity insurance will typically not provide cover for:

  • Intentional damage
  • Contractual liabilities
  • Professional fees
  • Known claims and circumstances
  • Fraud and dishonesty

Want to know more?

Jump online or give our friendly team at BizCover a call and receive multiple quotes from some of Australia’s leading insurers in minutes. Experience insurance made easy today.

*As with any insurance, cover is subject to the terms, conditions and exclusions contained in your policy document.  The information contained on this webpage is general only and should not be relied upon as advice.

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