Getting the right insurance for your business is essential. As well as making sure you're financially covered and have what you legally need, it's important to make sure you don't spend more than you need to on insurance.
Professional indemnity and public liability insurance are both designed to protect you and your business from legal challenges by third parties.
The cover that each provides is very different and whether you need either (or both) depends on what kind of work you do and what service you offer.
Public liability insurance
Public liability insurance is used if your business has to pay compensation for physical damage it causes to a member of the public or their property.
If an injury or death occurred on your property, this insurance would cover your costs and legal fees. For example, you would need to claim if a customer slipped on a wet floor on your premises and sued you for any injuries caused.
Public Liability insurance isn't compulsory for most businesses (horse riding companies are the only exception) but it's worth considering if your place of business is open to the public or to customers.
Professional indemnity insurance
Professional indemnity insurance covers your business if you have to pay for non-physical damage caused by a mistake made by your company.
It covers any damages or compensation you'll have to pay and your legal fees when defending the claim too.
This can apply if your business charges a fee for offering advice, design or consultancy to its customers. Some professions legally have to take out professional indemnity insurance, especially in the financial sector, such as financial advisors, solicitors and accountants.
There are several situations where your company might need to use professional indemnity insurance. These include if you have to pay damages for providing advice that leads to a client losing money, if your client claims that the work you've done for them is not of an acceptable quality, or if you lost documents or data.
Choosing your policy
Before you choose your policy, think about what your company and employees do and where the risks that you need to cover might lie.
Only look at policies that cover your type of business, as some are tailored towards particular types of company or worker, like insurance just for shops or for tradesmen.
It's important to make sure the policy you pick will meet your business' needs as well as keeping the cost as low as possible. You'll also need to check that the minimum amounts it will pay out are high enough to cover what you might claim for. Just picking cheap public liability and professional indemnity insurance will be a waste of money if it won't pay out when you need it.
You can either take out individual policies for professional indemnity or public liability insurance, or you could take out a wider business insurance policy that includes all of the options you need. Many are flexible enough to let you pick exactly what you want covered.
You can use our comparison to assess the policies available, as it displays those that have the option to include both public liability and professional indemnity insurance.