Does professional indemnity insurance cover public liability?

What is professional indemnity insurance?

This is for any small business, sole trader or freelancer who provides a professional service, and could have claims brought against them by a client for financial loss. It is mainly useful for businesses that provide a professional service or offer advice.

It covers situations such as negligence, or where you’ve done something which has resulted in financial loss for your client (e.g. giving bad advice or being careless in your work).

It is particularly important if you provide designs, recommendations, advice, or instructions as any part of your job.

Professional indemnity insurance usually covers you or your business for:

  • professional negligence
  • unintentional breaches of copyright or confidentiality
  • loss of documents or data
  • defamation or libel (i.e. saying or publishing something in public which harms a person’s professional reputation)

Who is professional indemnity insurance for?

Businesses that may need this type of insurance are typically:

  • heating and ventilation professionals
  • builders
  • electricians
  • commercial refurbishment specialists
  • shopfitters
  • refrigeration and air-conditioning engineers

In addition, many other trades and professions not in this list will also need cover.

What is public liability insurance?

Public liability insurance is also suitable for small businesses, sole traders, and freelancers. It differs from professional indemnity insurance as it protects you and your business against claims made by the public for damage or injury caused by your work.

Public liability insurance usually covers you or your business for:

  • injury compensation claims
  • property damage compensation claims
  • legal fees associated with injury or damage compensation claims

Who is public liability insurance for?

It is usually needed by builders, plumbers, carpenters, and other tradespeople who work with, or near, the public.

Does that mean I need both?

The two types of insurance cover different things, and usually provide different levels of cover. For example, professional indemnity insurance may cover you for damages of £50,000 upwards, whereas public liability insurance may cover you for £1 million or more.

Whether you need both will depend on your type of business. If you’re not sure, we would always recommend you speak with an expert.

Professional indemnity insurance does not cover your public liability risks. However, if appropriate, it may be possible to get both types covered by a single business insurance policy.