What is the Difference Between Public Liability and Professional Indemnity Insurance?
Researching the many types of insurance available for businesses can be a daunting task. It can be a stressful and timely process with so many covers, especially when you are not sure what they mean or who they are targeted at. Generally speaking, liability insurances are the most important to obtain because they can benefit each business.
Public liability and professional indemnity are subtypes of liability insurance and have this in common, protecting the company from third-party claims. But what are their differences?
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What is the Difference Between Public Liability and Professional Indemnity Insurance?
1. Who They Protect
Public liability and professional indemnity protect businesses from financial loss when they have claims from a third party, like a client, alleging that the company negatively impacted them.
However, public liability insurance is more beneficial for the third parties and professional indemnity insurance for the employees. This is because public liability insurance is concerned with claims of injury or property damage that a client or passer-by is filing, meaning that the insurance money would go towards their medical treatment or repairing the damage caused to their belongings. As a result, they are rewarded because they do not have to pay from their pocket, and they are guaranteed to fix the accident that happened.
Conversely, professional indemnity insurance protects employees when they make professional mistakes. When workers are overworked and overtired, which realistically can be quite frequently, they are more likely to be distracted and provide a lower quality service.
Consequently, if a mistake is made, the employees are liable and under fire, which is precisely the type of circumstance professional indemnity was made to protect them. Insurance would help pay any legal fees for hiring representation defending their title and recompensating the client affected so that the worker does not have to.
2. What They Cover
As mentioned above, public liability insurance covers any bodily injury claims or property damage from a third party. This includes a wide variety of accidents, as long as they happened as a result of the business’s services.
For instance, if customers were interested in a travel agency, they went inside and slipped on the wet floor. Their injury would have been caused directly because of the business. In the same way, if an employee showed them their website on the client’s phone and dropped it, they would be held liable for the property damage, which public liability would insure.
On the other hand, professional indemnity insurance covers accidents made by the employee like lousy advice, errors in judgement, omissions made, documents lost, copyright, or slander.
Usually, accidents do not have significant consequences because they are minor or can be fixed relatively quickly. Still, sometimes they are fatal, and this negligence could cost the customer large amounts of money or time. In cases like this, the professional indemnity would cover the client’s financial losses, for example, if the work was not completed to a high standard and the customer could not reach the estimated goals they initially anticipated.
3. The Types of Businesses Benefited
Public liability can be of great use for most businesses because every business has clients, and at some point, they would have to come together in person. Whether this is a client entering the establishment for a meeting, a customer going inside of a shop or restaurant, or an employee that works on improving and repairing their house, there is a likelihood of property destruction and an injury either way. Therefore, public liability insurance could benefit all businesses.
In contrast, professional indemnity insurance is not advantageous to every business. Whilst it is a critical and cost-efficient cover, it only benefits certain companies. Those that frequently give out advice are involved in a line of work that is creative and thus subjective or could make mistakes with a grave outcome are the companies that professional indemnity is targeted at, as this is what insurers will cover.
Many businesses, including shops, drivers or restaurants, could not find massive use for this insurance. Although it may be wise to purchase a small amount of cover, it would most likely not be necessary.
What is the Difference Between Public Liability and Professional Indemnity Insurance? To Conclude
To conclude, public liability insurance and professional indemnity insurance protect businesses by guaranteeing they do not suffer from financial loss when covered accidents occur. Even though they are both types of liability insurance, denoting that they safeguard the insured party against claims, these claims are very different. Whilst one helps customers when they are injured, the other defends employees from the consequences of their errors, even when they are responsible.
Find out more about the importance of insurance here.
Other useful links about Business Insurance:
Professionals Insurance
Project Manager Insurance
Property Manager Insurance
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