Owning a business is rewarding and has many advantages, but it also comes with its’ risks. One of the wisest decisions you can make as a business owner is to protect you and your company by taking out insurance.

Public liability insurance and professional indemnity insurance protect you from financial losses such as compensation claims. In this helpful guide, we share the differences between the two so that you are empowered to choose the right policy for your business.

What is public liability insurance?

Public liability insurance protects you in a few different ways. It will cover the expenses associated with any legal proceedings against you and if compensation is due, pay out on your behalf. 

What is professional indemnity insurance?

Professional indemnity insurance is particularly useful if the services you provide include advice and consultation. You may be challenged for negligence or giving advice that negatively affects your client. This is where professional indemnity insurance steps in to protect you. 

What is the difference between public liability and professional indemnity?

Public liability and professional indemnity insurance share the same objective of protecting you and your businesses. But, what they cover you for is different, and this is what we shall explain next.

What cover does public liability insurance provide?

Any business that comes into contact with members of the public will need public liability insurance. For example, you will need public liability insurance if you operate within the retail space and regularly have people coming into your shop. 

Public liability will help cover legal fees if there is a lawsuit and damages to pay. Say you own that retail enterprise, and a customer who ignores your wet floor warning sign slips and falls. They sustain an injury, but they decide to sue you for negligence because they are on your property. Public liability insurance covers the legal fees, including any compensation due for the effect of the injury on their lives. 

Public liability insurance also covers costs related to loss or damage to a third party property and, in the worst cases, death.

What Public Liability Insurance does not cover:

  • Work-related injuries to either yourself or your employees
  • If one of your employees sues you
  • A mistake that caused a client to lose money
  • A client acts on your professional advice, which has a negative impact on their life

What is covered by professional indemnity insurance?

Professional indemnity insurance covers businesses for a wide range of risks. Like public liability insurance, professional indemnity insurance will cover compensation claims if a client sues you for inadequate services.

For instance, an architect makes a mistake in a design. The building has already been constructed, and it costs the client a lot of money and time to put right.

Professional indemnity insurance will also cover other professional mistakes such as defamation, unintentional breaches of copyright, or where valuable documentation or data is lost. For instance, a breach of your computer system results in leaked confidential information regarding your client. The client decides to take your business to court for negligence. 

What professional indemnity insurance also covers:

  • Professional errors or negligence
  • Unintentional breaches of confidentiality
  • Copyright issues
  • Loss of documents and/or data.

What professional indemnity insurance does not cover:

  • Employee accidents that occur in the workplace
  • If an employee takes legal action against a company
  • Losses caused by reputational damage

Can anyone take out public liability insurance?

Any business can take out public liability insurance as it is suitable for companies of all sizes across many different industries. 

Can anyone take out professional indemnity insurance?

In some sectors, professional indemnity insurance is compulsory. For example, lawyers, financial advisors, accountants, and architects must have it. 

Where to find the best providers in South Africa?

Some enterprises may benefit from having both types of insurance. If you’re still unsure which insurance policy would best cover your business, call Budget Insurance today. If you want to get a quote for public liability or professional indemnity insurance, click here.


Article written by

Nelson Kalula is a Content Writer with loads of SEO experience writing articles o Lifestyle, Outdoors and various attractions around Cape Town.