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What Is the Difference Between Public Liability and Professional Indemnity Insurance?

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  • Written By: M. Lupica
  • Edited By: John Allen
  • Last Modified Date: 16 October 2014
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Public liability insurance and professional indemnity insurance are often confused as they both protect against negligence actions, but the two types of insurance cover completely different things. Public liability insurance protects the owner of a business against injuries to third parties that may hurt themselves on the premises of the business due to his or her negligence in maintaining the property. Professional indemnity insurance protects professionals — e.g., doctors and lawyers — from legal costs of charges of negligence that result from faulty professional advice they give their clients.

Public liability insurance is something that should be held by anyone who runs a business where the customer must come onto the property to engage the business’s services. Its purpose is to protect against any injury to the customer that may happen while on the property or otherwise stemming from the use of the business’s services. Public liability insurance policies typically cover a wide range of costs. They cover the injured’s medical costs, lost wages, as well as any property damage he or she may incur due to the policy holder’s negligence.

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Professional indemnity insurance is an important purchase for professionals — namely doctors and lawyers — though anyone who makes a living giving expert advice may obtain a professional indemnity insurance policy. Professional indemnity insurance pays for the insured’s defense for any lawsuit arising out of alleged negligence in performing their duties as a professional. Typically, the insurance company must also reimburse the professional for any damages that he or she is forced to pay as a result of negligence, or any settlement paid in lieu of going to trial.

Public liability insurance may apply to several different situations. A typical example might involve a shop owner on whose property a customer slips and falls due to a spill that was negligently not attended to. All the costs that flow from the injury, including pain and suffering, would be covered under a public liability insurance policy.

Conversely, a situation in which the question of whether or not someone holds professional indemnity insurance would be relevant is where a client is seeking the advice of a lawyer. Lawyers operate their businesses with the implied assertion that they are experts in their field. If they give faulty advice that the client relies upon and as a result suffers some harm, then the lawyer may be held liable for professional negligence. Professional indemnity insurance would cover the legal costs and other damages incurred from such negligence.

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