Public Liability or Professional Indemnity Insurance – What is the difference?

If you are a sole trader or a small business owner, you should consider whether you need to purchase Professional Indemnity cover.

‘PI’ as it is known, covers for compensation owed to a client which can vary significantly based upon the type of claim being made against you, its severity and individual circumstances.

PI cover will allow you to claim from your insurer if it is proven you have been negligent in your dealings with a client which results in them having a financial loss or damage to reputation.

Breach of Contract, Copyright, Financial Loss through Negligence, Incorrect Professional Advice, Defamation.

Cover applies to your Business and provides cover for actions of Employees too.

Premiums for PI depend on your turnover, fee income and type of work you do. Premiums are also related to the type of advice you give and to whom.

Some small Businesses will need PI cover to satisfy the requests of a Professional body.

Some main contractors will demand that you extend your Public Liability/Products Liability to include Professional Indemnity, to enable you to tender for work.

A simple test applies to check if you need to consider PI cover. If you have charged a client a fee to design work or agree to supervise installation utilising your Professional knowledge and skill, you could be liable in the event of a financial loss occurring due to your negligence.

Damage to Third Party Property or Injury as a result of your negligence is covered by your standard Public Liability Insurance, but will exclude PI as detailed above.