We are frequently asked, “What’s the difference between public liability insurance and professional indemnity?”
While there are several differences between the two, they are usually used interchangeably.
When choosing insurance for your business, it’s crucial that you opt for a plan that not only benefits you legally but can help you plan ahead.
The type of insurance you choose should depend on the type of business you operate. For example:hairdressers and makeup artists are different professionals.Therefore, the type of insurance coverage they need depends on what they do, what kind of clients they cater to and the type of products they market.
Public Liability Insurance
Public liability insurance protects businesses against financial risks and death caused by their products. In simple terms, it is for businesses who deal with the public. If you own a business where you have to interact with the public, you are already aware of the risks that come along with it.
Restaurant owners and hairdressers are two examples of such types of businesses. A hairdresser has to be careful that the product they use does not cause an allergic reaction or an infection. A restaurant owner has to be careful that the food they serve does not cause health complications.
What Does PLI Cover?
Public liability insurance policies provide comprehensive coverage. But generally speaking, it covers bodily harm or damage to a third party’s property. When you fill out the form for insurance, you need to tell your insurer the type of business you operate. Whether you need coverage for $10 million or $20 million, you need to specify your requirements and negotiate. Public Liability covers:
- Bodily injury &harm to a client or the public
- Property damage to a third party’s property
- Personal injury to you or your employees
- Any unlawful activity
What is Professional Indemnity?
Professional indemnity is insurance that covers the legal costs if a client decides to take you to court for damage one of your employees has caused. For example: if you’re a consulting firm and one of your employees provides advice to a client that backfires and results in a setback, your insurance will cover the legal damages. This is especially beneficial for freelancers such as graphic designers who have to work closely with their client and their brand image.
What Does Professional Indemnity Cover?
While PI covers a variety of policies, its main coverage is for professionals. An employee who loses important documents that can damage the client’s brand image is one such example. In brief, PI covers:
- Unintentional breach of copyright/contract
- Loss of valuable data or documents
- Defamation and libel
- Loss of goods or money