Different types of business insurance that cover compensation claims include professional indemnity insurance (PI) and public liability insurance (PL). The way each of these business insurance products protects businesses against risk is frequently misunderstood.
Quick answer: Professional indemnity insurance covers client claims for negligence or mistakes, but public liability insurance covers injury or damage.
Read on to see how each of these two crucial business insurance plans benefits businesses of all kinds, as well as why having both coverage is important and cost-effective.
What is public liability (PL) insurance and how does it work?
Public liability insurance protects your business from claims of bodily injury or property damage made by members of the general public. Customers, clients, suppliers, and passers-by could all be included.
The expense of your legal defence, compensation payments, medical expenditures, and lost income as a result of the claim may all be covered by public liability insurance.
Because they deal with the general public on a daily basis, large organisations carry public liability insurance as standard practise. However, many freelancers may be unaware of the necessity for this form of insurance, leaving them vulnerable to potentially financially ruinous claims.
In the event that a freelancer meets a customer in their house or at their client’s location, they should consider purchasing public liability insurance. It’s easy to believe you’re cautious and conscientious, but many accidents occur due to circumstances beyond our control. Accidental damage to client property by freelancers is not uncommon, but it can be costly if you don’t have public liability insurance.
Contractors often have an easier time making this option because many contracts require both professional indemnity and public liability insurance as a condition of doing business.
The most common instances of PL insurance claims explain how PL insurance works and include the following:
Slips – a customer comes to your place of business and slips on a damp floor, breaking their arm. As a result, they link work and file a claim against you for the resulting financial loss.
Trips – a client strains their wrist after tripping over a loose cable. They file a claim for compensation against you.
Falls – a client trips and falls down some stairs, breaking his ankle. They file a claim against you for the time they were out of work as well as the expenditures of rehabilitation.
What is the purpose of professional indemnity insurance (PI)?
Professional indemnity insurance protects you from client claims of negligence or errors. Claims can be based on professional errors, defamation or libel, inadequate work, or inappropriate business advice.
It can cover legal fees for defending a claim, as well as compensation payments, additional costs for resolving an issue, and lost revenue as a result of the claim.
Professional indemnity claims are common. For example, a creative design agency may create and print an advertisement for a client that contains incorrect contact information, causing the client to miss out on sales leads, or a recruitment agency may accidentally forward confidential client information, or a business consultant may give a client advice that causes their client to lose money.
In most cases, professional indemnity insurance covers the following:
- Professional negligence includes things like making a mistake on a client’s work or offering them bad counsel.
- Unintentional breaches of confidence, such as revealing confidential client information without permission.
- Unintentional copyright infringement, such as using an image on your website without the consent of the image owner
- False statements against a competitor or customer that harm their reputation are examples of defamation or libel.
- Data or document loss is a common occurrence.
- You are responsible for any loss of money or property.
Now you have the ideas about the difference between professional indemnity insurance with public liability insurance. Do share it to your friends who might interested on this topic.
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