Breaking down the differences: public liability vs professional indemnity insurance explained

Posted on March 04, 2024 | by | Posted in Insurance

The world of insurance can be a little overwhelming to navigate, and understanding whether you need public liability or professional indemnity insurance is one of the complexities that many people come across. There are instances where you may need both depending on your profession but in short, public liability protects you against lawsuits for damage or injury that may occur to a customer or their property, while professional indemnity insurance is to cover you personally in the event of professional negligence or errors. Let’s look a little deeper into what this means.

Public liability

Public liability is a type of insurance suited to any sized business that could potentially be sued for damages arising from a client or member of the public claiming they were injured or had property damage due to your business activities. Examples of public liability claims could include a customer slipping on a wet floor and sustaining injuries or a delivery driver damaging a customer’s letterbox as they entered the driveway. 

Professional indemnity

Professional indemnity insurance will cover you personally against a client or patient bringing charges of negligence. You may be a surgeon who performed a procedure your patient was not happy with or a financial adviser who has a client who feels you gave bad advice resulting in a significant financial loss. Essentially, professional indemnity insurance is to ensure that any costs associated with a dissatisfied customer who feels you were negligent in performing your professional services are covered.

How to tell which insurance you need

Some industry and registration requirements for certain professions and trades will dictate which insurance you need; however, the best way to discover what is required to keep you covered appropriately is to consult an experienced insurance broker such as Matrix Insurance. While there may not be a regulatory requirement for certain insurance, assessing your risk status will reveal if you need public liability insurance, professional indemnity, or both.

Public liability cases

To execute a public liability insurance claim, a member of the public will first need to establish that you failed to exercise a duty of care. In this event, their injury or damage could have come about from faulty equipment, maintenance issues, or avoidable hazards that could have reasonably been rectified or cordoned off before any injuries occurred. Examples include an overloaded shelf collapsing and crushing a customer, a puddle on the floor causing a slip hazard, or perhaps you have a lot of moving machinery in an area the public can access, allowing for accidental collision or impact injury.

Professional indemnity cases

Typically, we would think of professional indemnity as a type of insurance that is attributable to healthcare professionals and malpractice lawsuits. It actually extends to all professions, with examples being an IT consultant accused of breach of confidentiality, an accountant making an error that causes serious financial issues, or a lawyer accused of misrepresentation. If you offer services that could cause financial losses or physical injury, professional indemnity will keep you covered for any potential costs arising from claims of malpractice.

Costs associated with lawsuits

If a claim is made against you there are several types of damages that you could be liable for. Medical costs, compensation based on the severity of the injury, construction costs in the case of property damage, and loss of income could all be brought against you. Couple this with your legal fees and potentially the legal fees of the person suing, it can amount to quite a substantial sum of money. Having the appropriate insurance safeguards you in the event of a claim against you, seriously affecting you and your business financially.

Where to from here?

If you are still unsure if you need public liability insurance or professional indemnity insurance, consider this. Does the service you provide have room for error? Is there a possibility you may cause property damage? Are there any hazards within your premises that may cause injury? From something as simple as serving coffee that burns a customer, or a lawnmowing service that accidentally breaks a window from a stone flying up, or a masseuse who may have gone a little too hard on a person’s body, the potential for lawsuits or claims for compensation are constantly present.

The vast number of options available in the market when considering insurance makes it a wise choice to enlist an experienced insurance broker. Find someone with a proven track history of successfully finding the best insurance for their clients such as Matrix Insurance. With a nationwide client base, and a wealth of access to some of the best insurers in Australia, the ideal match for your insurance needs is but a phone call away.