What Is The Difference Between Public Liability And Professional Indemnity Insurance? 

Chances are you’ve probably heard of both Public Liability insurance* and Professional Indemnity insurance*, and while both provide a form of cover for your business, they are very different in what they protect your businesses from. 

Let’s take a look at these two important types of business insurance and look at what they provide cover for, what they exclude, and a few things to keep in mind as a business, sole trader or freelancer.. 

Public Liability insurance explained 

Public Liability insurance is designed to provide protection for you and your business in the event a 

customer, supplier or a member of the public are injured (and not covered by ACC) or sustain property damage as a result of your negligent business activities. 

Public Liability insurance provides a financial safeguard for your business from the potential financial implications of a claim. The related legal costs alone, regardless if you are found liable or not could have cause a huge hit to your business’ savings, something no business owner wants to worry about. 

What does Public Liability typically cover and not cover? 

A Public Liability policy will typically provide cover for: 

  • Repair or replacement costs for damaged property 
  • Personal injury or death compensation to third parties for events not covered by the ACC 
  • Legal and defence costs 

It will typically exclude: 

  • Injuries suffered by your employees 
  • Damage to your own property 
  • Personal injury compensation when covered by the ACC 

What may cause a Public Liability claim? 

As a small business operator there is a level of responsibility to make sure that you follow safety guidelines to create a low-risk environment. 

While you may take all the steps to ensure your workspace is safe from hazards and potential threats, accidents and incidents can still occur, especially when we least expect it. 

These are some examples of the type of situations where a Public Liability claim may occur: 

  • Accidental damage to a third party’s personal property 
  • A faulty or defective product that you have manufactured or sold resulting in damage to property 
  • Incorrect installation of equipment resulting in damage to property 
  • Injury, illness or death due to your negligence that is not covered by the ACC 

    Who might require Public Liability insurance? 

    If you interact with others in your business, then Public Liability insurance is something you may want to keep in mind. Here are some examples of other types of businesses who may consider this type of cover: 

    • Consultants/Contractors/ Tradespeople who work from home or visit their clients’ premises 
    • Businesses that have an office, showroom, shop or any premises where your customers or members of the public visit 

    Professional Indemnity insurance explained 

    Professional Indemnity (PI) insurance is an important form of protection for businesses that provide specialist services or professional advice. It is designed to respond to claims against your business for losses as a result of actual or alleged negligent acts or omissions in the provision of your professional service or advice. PI Insurance will also assist with the legal costs associated with responding to or managing claims which are covered by the policy. 

    Unlike Public Liability insurance, Professional Indemnity insurance is designed to protect your business from the financial impact of a claim resulting from the professional advice your business has provided to a client. 

    What does Professional Indemnity insurance typically cover and not cover 

    Professional Indemnity insurance will typically provide cover for: 

    • Damages and claimant costs awarded against the insured 
    • Legal and defence costs 
    • Claims investigation costs 
    • Inquiry attendance costs 
    • Public relations costs 

    It will typically exclude cover for: 

    • Intentional damage 
    • Known claims and circumstances 
    • Fraud and dishonesty 
    • Bodily injury / property damage 

    What may cause a Professional Indemnity claim? 

    Even with years of wisdom and expertise, the best of us can still make mistakes and errors. From a simple miscalculation to accidental oversights, claims can arise very easily. This is where having protection in place like Professional Indemnity insurance can give you peace of mind. 

    These are some examples of potential claims: 

    • Failing to provide promised services 
    • Being negligent in rendering professional services 
    • Providing shoddy, incomplete, or incorrect work 
    • Making mistakes or oversights 
    • Any omissions in the provisions of your service 

    Who might require Professional Indemnity insurance? 

    Providing professional advice to others mean you have a duty of care to your clients, so having adequate cover is something you may want to keep in mind.  

    These are some examples: 

    • If you provide paid professional advice or services to any business or individual 
    • Are a contractor who works for the government or other organisations whereby insurance is mandatory as a condition of the contract 
    • Where you work in an occupation that is required to have Professional Indemnity insurance by law 

    If you’ve been thinking about getting business insurance start a quote here with BizCover, and sort it  online in 5 minutes, so you can get on with your day. Rather chat to a Business Insurance Specialist? Call us on 0800 249 268 and get cover today.


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    *This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2024 BizCover Limited.  

    **Cover for natural disasters is subject to the location of your business and is not available to all postcode areas. Sub-limits and conditions apply. Refer to the policy wording.  

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