What is the difference between Public Liability and Professional Indemnity Insurance.

More and more contractors and tradesmen are being asked to hold Professional Indemnity Insurance as part of a contract or tendering process.
Clarke Williams can help arrange Professional Indemnity insurance for businesses based in the construction industry at a competitive premium, but what does it cover?
Professional Indemnity covers legal costs and damages in relation to alleged errors or omissions in the design or construction process.
For instance, a building contractor not following the design correctly for a retail fit out, a HVAC installation not being fit for purpose or an engineer using the incorrect materials. A Professional Indemnity policy will cover the costs of rectify the works and potentially any consequential losses as result of the original error or omission.
It differs from Public and Products Liability Insurance which covers you for any third party injury or property damage that my occur in the course of your daily activities.
That being said Professional Indemnity Insurance can cover bodily injury and property damage if it is as a result of a professional service i.e. the design or specification.
A Professional Indemnity policy is also different to a liability policy in the way that it looks at claims, as it works on a ‘claims made basis’.
A ‘claims made’ policy provides cover for claims which are notified to the insurer during the period of insurance. Liability policies are on a ‘claims occurring’ policy which provides cover for claims which occur during the period of insurance.
This means that under a Professional Indemnity policy provided the wrongful act occurs when a policy was in force, and you report it to the insurer during the period of insurance, it will be covered.
However, if the policy is cancelled or not renewed, cover will end and any subsequent claim – regardless of when it occurred would not be covered (even if it happened when a policy was in force)- Unlike a liability policy where you can go back to the insurer that was covering the business at the time of the loss.
As such, it’s important to have professional indemnity insurance cover in place – even between contracts or work to ensure your business is protected.
For more information on Professional Indemnity Insurance or to arrange a quotation please call 01732 252 898.

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