Public liability and professional indemnity insurance, and why almost every trade needs both

How the two covers divide the work

1. Public liability: physical harm to other people and their property. A client trips over a cable on your site. A tool falls from scaffolding onto a car. A pipe you fitted floods the floor below. Each of these is injury or damage to a third party or their property, and that is public liability's territory. The limit is chosen against what a serious injury costs rather than against the size of the job, which is why the standard limits offered are so much larger than most small businesses expect to need.
2. Professional indemnity: money somebody else lost because of your work. A design that did not do the job. A report with an error in it. Advice that turned out to be negligent. A specification that cost the client more to put right than it should have. Nobody is hurt and nothing is broken: what is lost is money, and pure financial loss is what professional indemnity answers for. It also pays the cost of defending the allegation, which on a technical dispute is frequently the larger bill.
3. Why the two are quoted together. Client contracts almost always name both, and the professional bodies that require insurance usually require professional indemnity alongside whatever public liability the work implies. A consultant who visits a client's premises needs public liability for the visit and professional indemnity for the advice. A builder who also designs needs public liability for the site and professional indemnity for the drawings. Very few businesses sit cleanly in one column.
4. The difference that trips people up: claims made against events. Public liability responds to events happening during the period of insurance. Professional indemnity almost always responds to claims first made during it, whenever the work was done. That means letting a professional indemnity policy lapse after a project ends leaves the completed work uninsured, and that changing insurer without matching the retroactive date can quietly strand years of past work. Continuity matters far more on one of these two covers than on the other.
5. Sizing each limit. For public liability, start from what a serious injury claim costs once care and lost earnings are counted, then check what your clients and any site you work on require, because construction and public sector contracts commonly specify a minimum. For professional indemnity, start from the client contract, which usually states a figure, then check whether defence costs sit inside or outside the limit, because that changes how much cover the number really buys.

Common questions

Do I need both public liability and professional indemnity?

Most businesses that both visit clients and give advice or produce work products need both. A trade that only works on property may need only public liability; a practice that only advises may need only professional indemnity. Client contracts usually settle it by naming what they require.

What is the difference in one sentence?

Public liability answers for physical injury or property damage caused to other people; professional indemnity answers for pure financial loss caused by your professional work.

Is either of them a legal requirement?

Neither is required by general law. Professional indemnity is required by regulators for several professions and by contract for most corporate and public sector work, and public liability is required by many sites and clients as a condition of engagement.

Can I buy them on one policy?

Usually yes, as sections of one business policy, and it is generally simpler at claim time because a single incident can touch both and one insurer means one argument rather than two.

What happens if I stop trading?

Public liability can usually be allowed to lapse once the work stops. Professional indemnity should be continued as run off cover, because claims about past work can arrive years later and a claims made policy only responds while it is in force.

Other trades

• Salons: what UK insurers print as a starting price
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• Hairdressing salons: what UK insurers print as a starting price
• Nail salons: what UK insurers print as a starting price
• Photographers: what UK insurers print as a starting price
• Cleaning businesses: what UK insurers print as a starting price
• Electricians: what UK insurers print as a starting price
• Plumbers: what UK insurers print as a starting price
• IT consultants: what UK insurers print as a starting price
• HR consultants: what UK insurers print as a starting price
• Business consultants: what UK insurers print as a starting price
• Management consultants: what UK insurers print as a starting price
• Consultants: what UK insurers print as a starting price