What’s the difference between professional indemnity & public liability insurance?
Professional indemnity insurance protects you if a client suffers financial loss because of your professional advice or service. Public liability insurance protects you if someone is physically injured or their property is damaged as a result of your business activities.
In other words, one is about your judgement, the other your actions. They cover different risks—and depending on the nature of your work, you may need one or both.
Professional indemnity is typically associated with white-collar professions: consultants, designers, IT contractors, solicitors, surveyors. If you give paid advice, prepare technical documents, or provide services that could be professionally challenged, this is your safety net. It covers legal defence and compensation costs if a client claims your work caused them a financial loss.
Public liability, on the other hand, is for physical incidents. A customer trips in your office, your tools scratch someone’s car, or you damage a floor while delivering equipment. This cover is especially relevant for tradespeople, mobile professionals, and anyone interacting with the public in person.
This guide will unpack each policy in detail—explaining how they work, when they’re needed, and why understanding the difference could save your business from serious risk.
What is professional indemnity insurance?
Professional indemnity insurance protects you if a client claims they’ve lost money due to your professional advice, service, or failure to deliver work to the required standard.
It covers legal costs and compensation payouts if you’re sued for professional negligence, errors, or omissions.
This type of cover is typically used by:
- Consultants and contractors
- Architects and engineers
- Designers, marketers, and IT professionals
- Accountants, solicitors, and financial advisors
Let’s say you’re a web developer and a bug in your code crashes a client’s checkout system during a peak sales period. Or you’re an architect and a design miscalculation causes delays and cost overruns on a project. If your client decides to take legal action—claiming your work caused them a financial loss—professional indemnity insurance steps in.
It doesn’t just cover work you’ve done directly—it can also apply to subcontractors under your responsibility, missed deadlines, defamation, IP infringement, and data breaches depending on the policy.
While not legally required, it’s often contractually required—especially in regulated professions, government tenders, or B2B consulting work. Many clients won’t sign contracts without seeing a valid certificate of insurance.
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Get QuotesWhat is public liability insurance?
Public liability insurance protects your business if someone is injured or their property is damaged because of your physical business activities.
It covers legal fees, compensation claims, and associated costs brought by members of the public—not employees.
It’s designed for situations where your work, premises, products, or people cause harm to third parties.
Common claim scenarios include:
- A customer trips on a loose tile in your shop and breaks their wrist
- You spill paint on a client’s carpet while decorating
- Your equipment falls during a delivery and damages property
Anyone who deals face-to-face with clients, customers, or the general public—tradespeople, shop owners, venue managers, mobile therapists—should consider public liability cover essential.
Although not legally required in the UK, it’s often contractually required by event organisers, landlords, local authorities, and commercial clients. Many won’t allow you to operate without showing proof of cover.
Typical cover levels range from £1 million to £10 million, with £2 million or £5 million being standard for most small-to-medium businesses. The right level for you will depend on your sector, risk exposure, and any third-party requirements.
It’s not about whether something will go wrong. It’s about being protected when something unexpectedly does.
How do these policies compare in practice?
Professional indemnity covers financial loss due to professional mistakes. Public liability covers physical injury or property damage caused by your business activities.
The risks, triggers, and people affected are entirely different.
Here’s how they stack up:
| Feature | Professional Indemnity Insurance | Public Liability Insurance |
|---|---|---|
| What It Covers | Negligence, errors, omissions, or bad advice causing financial loss | Injuries or property damage to members of the public |
| Who’s Covered | Clients who suffer financial harm | Customers, suppliers, visitors, or passers-by |
| Typical Buyers | Consultants, advisors, architects, designers | Tradespeople, shop owners, mobile businesses |
| Claim Examples | A flawed report causes client losses; a design error delays a build | A customer trips on-site; equipment damages client property |
| Legal Requirement? | No, but often contractually required | No, but often required by venues, clients, or local authorities |
| Standard Cover Limits | £250k–£2 million (industry-dependent) | £1 million–£10 million (depending on public exposure) |
Quick rule of thumb:
- If your mistake could cost someone money: consider professional indemnity.
- If your work could hurt someone physically or damage their property: you’ll likely need public liability.
Do I need both professional indemnity and public liability insurance?
If you provide professional advice and interact with the public, you may need both professional indemnity and public liability insurance.
They cover different risks—so one doesn’t replace the other.
Think of it like this:
- You’ll likely need professional indemnity if you charge for your expertise, create specifications or designs, or give recommendations that a client might act on financially.
- You’ll likely need public liability if your work brings you face-to-face with clients, involves site visits, public spaces, or physical activity that could cause injury or damage.
Some examples where both are essential:
- A freelance engineer who designs structural plans (PI) and attends on-site meetings with contractors (PL)
- A marketing consultant who delivers strategy (PI) and hosts in-person client workshops (PL)
- An interior designer who produces technical drawings (PI) and visits homes for installation work (PL)
If your business is entirely remote or digital, with no physical interaction and no risk of causing damage, you may be fine with professional indemnity alone. But once public interaction enters the picture, or you handle materials, equipment, or environments—public liability becomes non-negotiable.
The safest option? Identify what you do, who it affects, and where that exposure lies. From there, the right combination becomes obvious.
How do I get professional indemnity and public liability insurance in the UK?
You can buy professional indemnity and public liability insurance either as standalone policies or bundled together in a combined business insurance package.
The best route depends on your industry, the cover levels you need, and how your work is structured.
Here’s how to approach it:
- Standalone policies: Ideal if you only need one cover type, or if your work is highly specialised. These give more control over policy wording and limits.
- Combined cover: Many UK insurers offer bundled policies—especially useful for small businesses, consultants, and sole traders who need both. This can simplify administration and sometimes reduce cost.
Expect insurers to ask about:
- Your profession or trade
- Whether you employ staff
- Your annual turnover
- Your claims history
- The cover limits you need (e.g. £1M, £2M, £5M)
Pricing varies significantly. A solo designer working from home might pay under £100 a year for professional indemnity. A consultancy with on-site visits, subcontractors, or tools might need more comprehensive cover and higher limits—costing several hundred pounds annually.
The most important thing? Be honest and specific when getting quotes. And always check whether your contracts require a minimum level of insurance—it’s easier to align your policy now than fix it mid-project.
Final thoughts
Professional indemnity and public liability insurance cover very different risks—but both are essential safeguards in today’s working world.
If your advice could cost someone money, PI gives you a legal and financial backstop. If your work could physically injure someone or damage their property, PL protects you when something unexpected happens. Simple as that.
For many UK businesses—especially those working across digital and physical spaces—both policies aren’t just sensible, they’re expected. Clients, venues, and contractors may insist on it. And even if they don’t, your own risk profile probably does.
Take a moment to map your exposure. Think about where problems could arise, and who could be affected. That clarity is what turns insurance from an obligation into a real advantage.
Frequently Asked Questions (FAQs)
No, but it’s often contractually required—especially for regulated industries, consultants, and government work.
Yes. If your business only involves physical risks and no advisory services, public liability can be purchased on its own.
Professional indemnity claims often involve long investigations into negligence or advice. Public liability claims tend to relate to immediate accidents or damage.
It depends on the work. If you give advice and meet clients in person, both may be necessary.
You’ll likely need both policies—one to cover your guidance, the other to cover your physical presence.
Yes. Professional indemnity and public liability insurance are both allowable business expenses in most cases.
Yes, as long as the mistake was made during the course of their professional duties on behalf of your business.
Often, yes. Many insurers offer tailored packages that include both covers—especially for sole traders and small businesses.