The difference between public liability and professional indemnity insurance is that public liability is tailored for claims by members of the public for injury, illness or damage while professional indemnity covers claims by clients for professional mistakes or negligence.
There are other differences but in essence, they are complementary policies and they are not interchangeable. For example, professional indemnity does not cover claims from members of the public and neither does public liability cover mistakes made in the course of a professional service.
What are the types of mistakes?
All sorts of mistakes. For instance, your lawyers almost certainly insure their law firms against the claims made by clients alleging that the mistakes made by their lawyers have led to the loss or damage of their personal assets, for example mistakes made when handling estate transactions or divorce matters.
A standard public liability policy will not cover the mistakes made by professionals operating within their field and professionals need to ensure they and their law firms are covered by their professional indemnity policy.
So what about the claim by a member of the public on the other hand?
These claims are covered by public liability insurance and the same policy will cover the business even where a claim has been made. The claims under public liability insurance cover accidents that happen to anyone, anywhere, as long as they are non-deliberate.
For example, a dog that has no history of aggression is minding its own business and is on a short lead. It looks up at two dogs playing in a front yard and decides to take a walk. A member of the public decides to take a shortcut through the person’s back yard, where the dog is exercising itself. The member of the public trips and injures themselves, claiming the injury was sustained when the dog came right at them.
In this situation, the dog was behaving normally and the accidental injury to the member of the public was caused by the member of the public’s hasty decision to follow a shortcut instead of taking the well-lit side walk.
The member of the public in this scenario is an “unsuspecting person” and this is the type of claim that is not covered by professional indemnity and in which a standard public liability policy applies.
Public liability is designed to cover the reasonable defence by the dog owner. Does your insurance policy cover this and include a reasonable defence clause? If you don’t have the right type of public liability policy, your business may not have the cover you need when a member of the public sues you.
The average claim for injuries or damage caused by dogs in Australia is $22,000. Think about what would happen if the claim was made against you, and you did not have the necessary public liability insurance coverage.
If you don’t own a dog or have never had any physical contact with dogs, you probably don’t realize how many accidents do actually occur and how easily they happen.
In the dog examples above, the ‘accident’ actually occurred because a member of the public was rude and acted without regard for the dog owner or the owner’s property.