What’s the difference between Public Liability and Professional Indemnity?

difference between public liability and professional indemnity insurance
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What’s the difference between Public Liability and Professional Indemnity?

Public liability is used to protect businesses from third-party lawsuits due to injury or property damage caused by your business operations. Professional Indemnity is used to protect businesses from client lawsuits due to services they’ve provided.

Public Liability vs Professional indemnity Coverage
CoveragePublic Liability InsuranceProfessional Indemnity Insurance
Physical injury or property damage to third-parties (e.g. customers, members of the public)YesNo
Professional errors & omissionsNoYes
DefamationNoYes

 

Here are real-world public liability vs professional indemnity claims examples, which will illustrate the differences in more detail:

Example CompanyPublic liabilityProfessional indemnity
Construction firmYou’re constructing a building, and accidentally damage surrounding properties.

 

You’re liable to the property owners for the damage you caused them due to your business operations.

You’re constructing a building, and your workers do a shoddy job causing structural instability.

 

You’re liable to your client for financial losses you caused them due to your negligence/errors/omissions.

Doctor’s clinicA patient slips and falls in your clinic, injuring themselves.

 

You’re liable to the patient for their injury, since it was caused by your business operations.

Your medical advice worsens the patient’s condition.

 

You’re liable to the patient for causing them bodily harm due to your negligence/errors/omissions.

Financial services firmYou post some advertising signboards in public. One of your signboard falls on a pedestrian, injuring them.

 

You’re liable to the pedestrian for their injury, since it was caused by your business operations.

You trash a competitor with exaggerated claims about how bad their business is.

 

You’re liable to the competitor for defamation.

 

In each of the above scenarios, this is how each type of insurance would respond to protect your business against legal liability:

  1. Public Liability Insurance: This policy would protect you from the legal fees and damages awarded to your injured client. Some public liability policies will also have Food & Beverage extensions, which will cover food poisoning caused by your business.
  2. Professional Indemnity Insurance: This policy would protect you from the legal fees and damages awarded to your client.

Common misconceptions about public liability vs professional indemnity:

#1. Public liability covers liability to the entire “public” body right? So shouldn’t it cover me if I make mistakes while providing a service to clients?

Nope. Public liability is designed to protect you when your business accidentally causes injury or damage when conducting business activities in public, or that involve congregations of people. It’s not designed to protect you if you make a negligent mistake while providing your services. In fact, public liability policies will often come with clauses that will expressly exclude coverage for any protection offered by a professional indemnity policy.

#2. Public liability should cover me if my business makes defamatory statements, right?.

That’s another nope. Public liability will not protect you if you make defamatory statements about someone else, like a competitor. Defamation encompasses slander (which is spoken), and libel (which is written). Only professional indemnity would cover you if you had committed such an act.

Do businesses need both public liability and professional indemnity insurance?

If your business involves providing any kind of services to clients, then yes – you need both insurance types. As you’ve seen in the above examples, public liability and professional indemnity protect you from very different – and very real – risks. If you only have one or the other, then you’re really exposing yourself to 50% more risk. If you have one of these policies, make sure to get the other so that you’ll be fully protected against lawsuits.

If your business sells only goods instead of services, then instead of professional indemnity, you’ll need a product liability policy. Product liability insurance will protect you from lawsuits targeting your business because of injuries or damage caused by goods you sold. Depending on what kind of goods you sell, the potential liabilities on your business may be huge. For instance, if you sell car parts to auto workshops that later turn out to be defective, you could cause fatal car accidents. You’d be legally liable for someone’s death in that scenario.

How much does it cost to have both public liability and professional indemnity insurance?

Public liability insurance is very affordable, with a large amount of $1,000,000 coverage starting at only $16/month (depending on the industry). That’s the price of a single meal in a restaurant!

Professional indemnity insurance will have higher premiums, and due to its highly tailored nature, quotes can only be produced with more precise information about the business seeking coverage. Get in touch with us for a quote on professional indemnity coverage for your company.

Remember that with Provide, you save up to 25% on your insurance premiums. Thanks to our digital operating model, our overheads are much lower, and we pass every dollar saved back to our clients.

Sometimes business owners might brush off the need for commercial insurance, viewing it as an unnecessary expense for a risk that will never materialise. We would urge extreme caution in this regard – legal liability is one of the most serious risks any business can face, particularly for small businesses that have limited resources to handle sudden, large expenses.

When you get hit with a lawsuit totaling hundreds of thousands of dollars (or even millions), the small annual premium for a good insurance policy will immediately seem like a small sum compared to the immense legal costs you’ll be facing.

What are the typical coverage amounts businesses should have

What other types of liability insurance do businesses need?

In addition to public liability and professional indemnity, businesses should also have:

  • Directors & Officers (D&O) Liability Insurance: This type of insurance protects company directors & officers from personal legal liability. Most company directors are blissfully unaware that their position exposes them to a stunningly wide variety of legal liabilities. Get an instant D&O insurance quote here.

Read more about the top 5 personal liabilities of company directors in Singapore.

  • WICA Insurance (Work Injury Compensation): This type of insurance protects the business from liability when workers get injured on the job. Under the 2012 WICA Act, your workers can file a WICA claim against you if they get hurt or sick due to work-related causes. You’ll have to pay their medical fees and damages if the WICA claim is approved by the courts. MOM (Ministry of Manpower) regulations also stipulate mandatory WICA insurance for employees earning less than $1,600/month, or employees performing manual labour. Get an instant WICA insurance quote here.

Where can I get great public liability and professional indemnity insurance quotes?

Get broad-coverage and affordable quotes for public liability here, and professional indemnity here. With Provide, you save up to 25% on your insurance premiums. Our digital operating model creates lower overheads, and we pass every dollar saved back to you.

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