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Professional Indemnity vs. Public Liability 


Both Professional Indemnity and Public Liability insure businesses and cover claims for compensation made by third parties. However, the nature of these compensation claims differ. Professional Indemnity insurance covers damages incurred due to claims of negligence, omission, or mistakes in the professional services rendered by a wide range of professionals. Public Liability insurance is designed to cover claims made by members of the public, suppliers or even customers for personal injury or property damage caused by your negligent business activities.

What does Professional Indemnity Insurance do?

Professional Indemnity insurance is an important form of protection for businesses that provide specialist services or professional advice.  It is designed to respond to claims against your business for losses associated with actual or alleged negligent acts or omissions in the provision of the professional service or advice. Professional Indemnity insurance will also cover legal defense costs and compensation or settlement payments. For example, consider the financial losses if a consultant’s advice was wrong, an architect were to make a design error or an engineer miscalculates.  These professionals could all benefit from Professional Indemnity Insurance.

What does Public Liability Insurance do? 

Public Liability insurance protects businesses from claims that a member of the general public files for illness, injury, or damage to property (public/private) caused by the businesses negligent business activities. For example, if a supplier slips and falls on the wet floor of a business premises, the supplier can seek compensation for the associate personal injury against the business. If a diner falls ill after eating the food at a restaurant, the diner can seek compensation against the restaurant owner for any loss or injury caused.Public Liability insurance covers defense costs, compensation payments to the third party and associated claim costs, for claims covered by the policy.

How to calculate the cost for Professional Indemnity and Public Liability insurance?

The cost of Professional Indemnity is dependent on a number of factors, including the nature of your business and the amount of cover you are seeking.  Insurers also consider things like your location, number of employees, revenue and your prior claims history.

How much insurance do you need?  Think about what would be the worst-case scenario? How bad could a claim against a professional in your domain be? Calculate the maximum amount of money that you might have to pay for compensation/settlement along with the legal fees. Your Professional Indemnity insurance should cover the costs comfortably.

The cost of Public Liability insurance costs is also dependent on the industry your business operates in, the size, location, and nature of your business. Whether your business has a high turnover, high numbers of people visiting the premises, or involves the use of dangerous/complicated equipment are also important factors that need to be considered.

If you are a small, office-run business, Public Liability insurance is likely to cost less than if your business was large and had a high volume of customer contact.

Get Professional Indemnity and/or Public Liability insurance?

Professional Indemnity and Public Liability insurance cover two different types of risk. Both are valuable for different reasons and you may need both or just one depending on the type of business you have, your contractual obligations and your professional obligations.

Most businesses should at least consider Public Liability insurance, as there is the potential for any business to cause injury or even illness  to others as well as damage third-party property. These are just two types of insurance that will help assist you and your business if you were to face a claim relating to actual or alleged negligent business activities.

Professional Indemnity (PI) and/or Public Liability (PL) insurance can help you safeguard your business from future risks. BizCover can provide quote for PI and PL insurance from some of Australia’s leading insurers in just a few minutes.

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

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