Public liability v professional indemnity: what’s the difference?


COMMERCIAL insurance contracts can be quite complex. Some might say insurance has its own ‘language’ with many legal terms used within policy documents, that can be quite confusing.

Today we're tackling the question of public liability (PI) versus professional indemnity (PL) insurance and explaining the difference.

PI and PL are different types of business insurance that cover compensation claims, and it is often misunderstood how each of these insurance policies protect businesses against risk.

In short, professional indemnity insurance covers claims made by clients for professional negligence or mistakes, whereas public liability insurance covers claims made by members of the public for injury or damage.

:: How does public liability (PL) insurance work?

PL has become a vital form of insurance protection for freelancers, contractors, engineering firms, manufacturing companies, self-employed consultants, and small businesses for example, who have contact with clients and the general public.

PL insurance covers claims of injury or property damage by a member of the general public against your business. This could include customers, clients, suppliers or even passers-by. This type of insurance can also cover the cost of your legal defence, compensation payments, medical costs and loss of income as a result of a claim.

Insurance claims can be wide ranging, some of the most common examples would be slips, trips or falls.

:: How does professional indemnity insurance (PI) work?

PI insurance will cover claims made against you by a client for professional negligence, errors or omissions. Claims can be made due to professional errors, defamation or libel, sub-standard work, or the perception that you gave your client ‘poor business advice’.

This kind of indemnity insurance can cover the legal costs incurred in defending against a claim, compensation payments, any additional costs for rectifying an issue as well as covering loss of income (consequential loss) as a result of a claim.

For example, an architect may be sued by his client for the costs of rectifying an extension built from a flawed design. Or perhaps a marketing agency omitted a digit from a client’s phone number and left out their web address in a printed advert. A claim could be brought against the agency to rerun the advert or potentially, for loss of income due to the mistake.

Professional ndemnity insurance typically covers the following:

• Making a mistake in a piece of work for a client or giving poor advice in return for a fee.

• Unintentional breach of confidentiality, i.e. sharing sensitive client information without permission.

• Unintentional breach of copyright, i.e. using an image on your website without the owner’s permission.

• Defamation or libel, i.e. making false comments about a competitor or client that damages their reputation.

• Loss of data or confidential documents.

• Loss of money or goods for which you are responsible.

Makes you think, doesn’t it?

What’s clear from this quick comparison is that professional indemnity & public liability insurance is that claims come in all shapes and sizes and can cost a significant amount of money.

Mistakes can happen no matter how careful you are. Anticipating them isn’t easy but, thankfully, protecting yourself and your business is. That is why we recommend business owners contact their insurance provider for professional advice and guidance.

:: Conor Kirwan is account executive at AbbeyAutoline Insurance Brokers (for more further information or advice on business insurance visit