What is the difference between Professional Indemnity [PI] Insurance and Public Liability [PL] Insurance?

Public Liability Insurance

What is the difference between Professional Indemnity [PI] Insurance and Public Liability [PL] Insurance?

Chris Jordan-Pinder
2022-12-05 19:14:32

Professional indemnity insurance (PI) and public liability (PL) insurance are different types of business insurance that cover claims for compensation made against you.

The difference between Professional Indemnity and Public Liability, in short

Public liability insurance covers claims made against you by customers, clients or members of the general public for injury or physical damage. Professional indemnity insurance covers claims against you by your clients for alleged mistakes, professional negligence, bad advice, libel or slander that cause your client to suffer a financial loss.

Public liability claims are on an claims-occurring basis, whilst professional indemnity is on a claims-made basis. You can find more information on this using the links below.

How does Public Liability Insurance work?

Public liability insurance covers claims for property damage or of injury. Claims can be made against you by customers, clients, or passers-by – the general public. You have to have had insurance in place at the time that the event occurred that leads to the claim being made. This is called claims-occurring.

Public liability insurance usually also covers the cost of legal defence of the claim, medical costs, compensation payments and loss of income as a result of the event that leads to the claim.

Click here to read more about Public Liability Insurance.

How does Professional Indemnity Insurance work?

Professional indemnity insurance covers claims made against you by a client for alleged mistakes or professional negligence in any work that you have done for them. You have to have insurance in place at the time the claim is made against you, regardless of when the event occurred that leads to the claim. This is called claims-made. You have to have a clause in your policy called retroactive cover in order to cover claims that occurred before the start of your current policy.

These claims could be made due to professional errors, defamation or libel, perceived poor business advice or sub-standard work. Whether the claims are founded or not, you will have to defend your position, at the very least.

Professional indemnity insurance can cover the cost of that legal defence, any costs of rectifying the issue, compensation payments awarded and any loss of income as a direct result of the claim.

An examples of professional indemnity claims could include an engineer using the incorrect unit of measurement in plans that results in the incorrect amount of supplies being purchased, or an engineer making a mistake in their calculations that results in incorrect materials being used on a project that later results in defects or failure of the project, causing a financial loss to the client.

Click here to read more about Professional Indemnity Insurance.

Professional indemnity insurance (PI)

What is the difference between Professional Indemnity [PI] Insurance and Public Liability [PL] Insurance?

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What is the difference between Professional Indemnity [PI] Insurance and Public Liability [PL] Insurance?

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