When you’ve got a great idea, and a chance to get your business off the ground, insurance can be the last thing you think about. However, insurance should be top of your list; without it, you could lose your business, risk being sued privately and actually be breaking the law.
When you start out with a new business, it’s difficult to know which insurance you need – professional liability or public indemnity.
Public Liability Insurance
Public liability insurance is needed when you’re working with the public. It covers you when a member of the public makes a claim against you for something that happened to them whilst either in your workplace or whilst you were in theirs and something like your equipment caused an accident.
Basically, it covers your legal costs and any compensation due to the claimant.
Examples of this are, a member of the public slipping on a wet floor in your shop, garage or office. Or you’re delivering a presentation in someone’s office and someone trips over your laptop cable. It can cover you for damage done to someone else’s property. For example, if you’re using a client’s equipment and you broke it.
You need this if you have any premises where you’ll welcome the public, or where there’s a possibility of damage or accident occurring from your equipment or work elsewhere.
Professional Indemnity Insurance
This covers you if someone wants to sue you for advice or services you’ve given. This insurance covers legal costs and any potential compensation. You may have to defend yourself, even if you didn’t make a mistake.
If you give professional advice, e.g. as a trainer, adviser or consultant then professional indemnity insurance is vital. Professional indemnity insurance also covers you for libel, loss of documents or data and breach of copyright where this is accidental.
So do you need one, or both insurances? If you operate premises you will need public liability insurance, regardless of what your business is. This will protect you and the members of the public who visit you. If you’re a courier or a driver your motor insurance should cover your vehicle as a place of business, but if you had an office for the public, you’d need the public liability insurance.
If you’re giving advice e.g. as a driving instructor or a consultant, and you operate from home, you may not need public liability insurance, but you will need professional indemnity.