Public Liability & Professional Indemnity

What is Professional Indemnity Insurance?

This insurance protects you, the policyholder, against any financial loss suffered by a third party, so your customer, for any incorrect advice, design or specifications recommended or given.

It differs from Public Liability insurance as that is designed to compensate a member of the public for any damage, loss or injury that they may receive from the work carried out. Whereas Professional Indemnity insurance is to compensate for financial damages which a client may claim as a result of negligence from a service that you have provided.

A Professional Indemnity policy is designed to protect you against claims arising from:

• Negligence or breach of professional duty
• Negligent misstatement or negligent misrepresentation
• Defamation, libel or slander
• Infringement of any intellectual property right, other than patent and trade secrets
• Dishonest or fraudulent acts or omissions of any present or former employee (subject to exclusions)
• Breach of any contractual or common law obligation of confidentiality, including invasion of privacy
• Inadvertent transmission of a virus
• Any other civil liability

If you sell professional advice or your business offers a service, for example architects, surveyors, accountants, solicitors or consulting engineers, Professional Indemnity insurance may be compulsory due to rules and regulations.

Even if Professional Indemnity isn’t compulsory within your industry, you will still be held liable if you’ve charged a fee for services or advice and your customer suffers a financial loss as a result.

Professional Indemnity is usually provided under a claims-made basis whereby a claim can only be made during the life of the policy. This is based on the condition that you have continuous cover from the date that you first took out the insurance, also known as your retroactive date.

What is Public Liability?

It protects the policyholder against any work carried out by you, or your employees, that could results in injury or death to a third party, or damage to their goods or property.

If a claim is made by a member of the public against you then you are legally liable to compensate for financial loss suffered, or any other recompense, plus any legal fees.

In the event of death, serious injury or a large damage claim, compensation payments can run to hundreds of thousands into millions of pounds. Even if a claim was unsuccessful you may still incur legal costs and fees.

Any claim, whether large or small, could have an impact on your businesses finances and reputation.

Public Liability is an important investment which protects you and your business against possible claims and allows you to carry on your work without the financial burden affecting your business.

Public Liability is usually bought in limits of cover starting at £1,000,000. The limit protects your business for each and every claim made against it up to this value over an annual policy period.

Those businesses operating in the public sector will often require limits of £2million, £5million and sometimes up to £10million in order to satisfy contract requirements. Such high limits are often put in place because the risk of a claim could be higher due to the type of work being carried out and the buildings being worked on.

A Public Liability policy for your private sector clients will help you obtain and maintain business as your customers will have faith that, in the event of damage to their property, they are properly protected by your insurance.

As the old saying goes, accidents happen, so, no matter how watertight your health and safety and risk assessments, it’s important to properly protect you and your business in case the worst happens.