Professional Indemnity vs Public Liability

Public liability versus professional indemnity: what’s the difference and who needs each type? We look at the data.

Two of the most common business insurance policies sound similar and get muddled constantly. They protect against different things, though. Here is the difference, who needs which, and what our own clients hold.

Public liability, in plain terms

Public liability covers harm your business causes to other people or their property while you go about your work.

Imagine a client trips over a cable in your office and breaks a wrist. Or you’re on a job and damage a customer's floor. Public liability covers the compensation and the legal costs.

It is about physical injury and property damage to people outside your business.

Professional indemnity, in plain terms

Professional indemnity covers harm caused when your advice, work or service turns out to be wrong.

This could include recommending something that costs a client money, or perhaps there’s an error in a design, a report or a line of code. A client says your work was negligent and they are out of pocket because of it. Professional indemnity covers the claim and the cost of defending it, even when the claim is unfounded.

It is about financial loss from the work itself, not physical accidents.

The difference between PL and PI, in one line

Public liability is "someone got hurt or something got broken", whereas Professional indemnity is "our work was wrong and it cost them money".

Who typically needs each

Public liability matters most when the public or your clients come into physical contact with your business: shops, cafés, restaurants, trades, manufacturers, anyone with premises or a physical product.

When looking at our own data, these are the business types most likely to hold Public Liability (PL);

• Food and beverage: 91% hold Public Liability
• Health and wellbeing: 78% hold PL
• Retail and e-commerce: 75% hold PL
• Manufacturing and engineering: 73% hold PL

Taken from a sample of 600 customers. The data shows what % of customers in that category hold Public Liability.

Professional indemnity matters most when you sell knowledge or advice: consultants, agencies, accountants, designers, IT and software firms, anyone whose product is their expertise.

Based on our client data, these business types are most likely to hold Professional Indemnity (PI);

• Edtech: 90% hold Professional Indemnity
• Marketing and advertising: 88% hold PI
• AI and machine learning: 86% hold PI
• Business consultancy: 85% hold PI

Taken from a sample of 600 customers. The data shows what % of customers in that category hold Professional Indemnity.

Some businesses need both, of course. An agency can face a slip claim from a visitor and a "your campaign cost us money" claim from a client in the same year. And sometimes the choice is not yours to make: client contracts and professional bodies often require professional indemnity before they will work with you, so it can be a condition of getting paid.

Based on our book, 29% of clients hold both covers.

Taken from a sample of 600 customers. The data shows what % of customers hold PI and PL.

If you are not sure which type of insurance your business needs, we’d love to talk you though it. Get in touch.