Business Cover
If you're a business owner and offer products and services to the public or other businesses, you are expected to carry a comprehensive insurance portfolio that will protect both you and your clients. Commercial insurance is extremely important in today's litigious society. While business owners and account managers understand they must invest in contents and buildings insurance to protect their property, many can become confused when it comes to their liability and indemnity risks. Failing to realise the difference between public liability insurance and professional indemnity insurance can leave you vulnerable to unnecessary lawsuits. Gain an understanding of what each coverage is for to ensure you are investing in adequate insurance to protect your business and personal assets.
Public Liability
Public liability Insurance, often referred to as PL in the UK, is liability coverage that will pay monetary damages to a third party if you are deemed responsible for injuries or damage. Third party claims can be extremely damaging to your business. For example, if a client visits the premises where you conduct business and are injured by you or your business operation you can be deemed negligent. Public liability Insurance covers unintentional negligence claims dealing with third party claims of damage or injury. Even if the claims are unfounded, a PL insurance policy will pay for defence costs, settlements, and judgments awarded to the claimant. It is important to understand that a public liability policy will only pay for claims from third parties and not claims arising from employees.
There are several exclusions listed on a PL insurance policy. Where these gaps exist, there is a need for more specialised coverage. Professional indemnity plans are designed to cover gaps that arise in professional businesses. Professional indemnity insurance plans, also referred to as PI insurance, are designed to cover claims that may arise if you, as a professional, fail to produce work at the level that would be expected from a professional. Professionals are individuals or firms that offer a service that they were specially trained and educated to provide. Because professionals are held to a higher standard to the public, they are expected not to make mistakes that could financially damage their clients. If a client feels the professional’s errors affected them, they have the right to sue.
Professional Indemnity
Professional indemnity insurance will cover alleged errors and omissions that are made by the covered professional. The policy will pay for legal defence costs, settlements, and judgments arising from a professional liability lawsuit regardless of whether the claims were founded or unfounded. The cost for legal defence alone can be extremely high. For professionals in the UK it is strongly recommended to carry professional indemnity insurance for financial protection, particularly for those that offer advice to their clients.
While all businesses have a need for public liability insurance, not every type of business will need a professional indemnity plan. If you offer a service that the typical individual could not do without training, chances are you have a need for a PI policy. Make sure you are carrying necessary insurance cover and protect your business and your personal assets from third party lawsuits.