Are you self-employed or run your own business? If so, do you know which type of insurance you should have – public liability or professional indemnity?
In truth, the answer is often ‘both’, but do you know why?
Both are business insurances designed to cover compensation claims, but there are important differences between the types of claim they cover. Public liability can cover compensation claims made against you by a member of the public for injury, damage and legal fees. For example:
- You are a self-employed personal trainer and run an outdoor exercise class in a public park. A passing dog walker trips over some of your equipment lands badly and breaks her arm. She sues you for loss of earnings in respect of the time she has had to take off work.
By comparison, professional indemnity can cover compensation claims made against you by a client for mistakes that incur, for example, financial losses, damages and legal fees as a result of professional negligence, copyright or confidentiality breaches, data loss, defamation or libel. For example:
- Poor data control and staff training practices result in a new and inexperienced member of staff inadvertently emailing confidential client data to the wrong person, or
- Professional advice given to a client regarding their investments leads to financial loss.
In all cases, the amount of compensation claimed can easily spiral when you take into consideration the knock-on effects of damage, injury or poor advice, particularly when a claim involves loss of earnings. Often simple mistakes can escalate into claims that can threaten the financial viability of your business if you aren’t adequately insured.
It is easy to see why public liability insurance is particularly important for our personal trainer, tradespeople and others dealing directly with the public, such as shops and restaurants. However, when you consider that a member of the public could be a client, customer, supplier or passerby, most self-employed people and businesses will deal with ‘the public’ in some form or another and will therefore benefit from public liability insurance.
Professional indemnity insurance is clearly relevant for businesses providing professional services, such as consultants, architects and accountants, but it is also relevant for our personal trainer too, who in the course of her work is advising clients how to push their bodies in order to become fitter and stronger. If a client develops an injury as a result of following advice given by the trainer then they could potentially claim compensation. Professional indemnity insurance could offer the trainer protection against this type of claim.
If you are self-employed or run your own business you may also want to consider employee liability insurance, to protect against claims of personal injury or property damage caused by your employees, and/ or product liability insurance, to protect against claims of personal injury or property damage caused by products sold or supplied through your business.
There are many different products available on the market, and it can be difficult to know which ones are right for your business. Contact us at Hugo Wright Ltd and we will talk you through the differences and advise according to your circumstances. We pride ourselves in providing a personal service, tailored to your needs and we will take the time to get to know you and your business requirements. We have access to a wide range of cover types and are experienced in providing specialist cover for the self-employed and small business.