Indemnity or Liability- whats the correct cover?
Indemnity Liability Insurance-When shopping around for a cheap online business insurance quote, many small business owners get confused between indemnity liability insurance. Many potential policyholders will type things into a search engine like ‘indemnity and liability insurance’, or ‘public indemnity insurance’. Yet, as a self-employed or professional contractor, it is important you understand the differences between professional indemnity insurance and public liability insurance.
It is not surprising that many business people are a bit confused with regard to insurance definitions. There are so many different types of trades and occupations. Many trades have specific advertising campaigns directed at them, under the general banner of ‘business insurance’. It does not help when public liability insurance is included and many other types of insurance, (such as employers liability insurance and commercial landlord insurance). Most small business owners tend to take out a public liability insurance policy to be on the safe side. It is generally a low cost product, when compared to a professional indemnity insurance policy.
In very simple terms, if you are a tradesman, or operate in physical environment near members of the public, you are quite likely to require public liability insurance. It provides protection for either individuals or businesses, against claims from Third Parties caused by bodily injury or disease or damage to their property. You or your business can become liable to a member of the public, due to a range of things (such as negligence, nuisance, trespass, strict liabilities or statutory liabilities). This type of cover will only provide indemnity, if the policyholder is legally liable for the occurrence and negligence can be proved. Whereas, if you are a white-collar professional, providing some type of expert opinion, advice, guidance to clients – you may also need to buy a professional indemnity insurance policy. Most professional indemnity policies have two objectives. The first is to pay for any compensation claims against you in certain circumstances. The second objective is to pay for the legal costs of defending an action against you. You will still need to insure against public liability, but this cover will usually form part of a business package, including such things as your office contents, stock and equipment
So in theory, it may seem a relatively straightforward exercise to decide which type of policy to buy. However, in practice there are many professional people that charge for giving professional advice, while also operate in close proximity to members of the public. For example, a surveyor or an architect is likely to produce professional reports to clients such as homeowners, housing associations, property developers and so on. Yet many of their meetings are likely to be undertaken on the client site. For example, this may be a Brownfield site where discussions are ongoing regarding blocks of flats development. Alternatively, the client may visit the offices of those professionals, to discuss those ongoing architectural reports, engineering reports or environmental assessment studies. However, despite the need to take cover for indemnity and liability in our example, remember that the surveyor would need to buy two separate policies. Even though the potential risks may overlap in some practical situations, the policies will have clear dividing lines about the basis of risk and cover. It is highly unusual that an insurer would bundle both types of policy together. By using different insurers for both separate risks you may produce separate quotes.
So before you request insurance quote online, try and think through your individual insurance needs and requirements. It is possible you may need to buy both professional indemnity insurance, as well as public liability insurance. This will probably depend largely on the nature of your work, and its impact upon other people.
Firstly, decide whether you need public liability insurance. For instance, do you work in close proximity to members of the public, during your normal course of business? Do you work on a client site or are you isolated and working home full-time? Do clients, or members of the public ever visit your offices or your own home? If so, you probably will need public liability insurance. Many local authorities and astute customers will insist that that your business has adequate public liability policy before even letting you on-site. A classic example would be a catering company or a tree surgeon, seeking work within the grounds of a hotel. The good news is, if you purchase a business combined policy, it will usually already provide cover for your liability cover. Make sure it includes an extension for your work away from your business premises.
Secondly, think about whether you need to buy a professional indemnity policy. Answer the following; If you are some type of professional adviser, what is the financial impact or likelihood that an error or omission on your part, would lead to you being sued in the future? Are you dealing in life-threatening, or high risk areas of professional consultancy? Is the type of advice you’re giving, regulated or controlled by some type of law, authority or guided by the associations principles? If the answer is yes to these types of questions, your insurance requirements may lead you to deduce that it would be prudent to buy a indemnity policy, that would provide you with much peace of mind.
When comparing one indemnity policy with another, remember to read the policy wording. This will contain important details which will enable you to see if you insurance needs are in tune with the features and limitations of the policy. In particular, pay close attention to the following. Firstly, check how the claims notification procedure works. As most policies are retroactive, you should make sure any historical claims or ongoing disputes are noted on your application. These are material facts and must be notified. Secondly, check the definitions and insurance clauses, to see if it covers the types of advice or services you sell. Thirdly, read the list of explicit exclusions, which may mean the policy does not cover certain scenarios you really need cover for. Fourthly, read the endorsements – these are usually a very stale set of amendments and descriptions at the back, which may directly impact whether you may be covered and at what levels. Lastly, as PI is such a specialist area, you may get a more thorough interpretation of risks, covers and exclusions – by speaking with a specialist insurance broker.
If you would like a quote for either an indemnity or liability insurance policy, please complete the form above, or give us a call.
Here is a sample list of occupations we can provide insurance cover for:-