Professional indemnity vs public liability insurance: what's the difference?

Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05

If you run a business in the UK, "professional indemnity" and "public liability" are two of the covers you will meet first. They sound similar and are often bought together, but they answer very different questions. One is about the quality of your work and advice; the other is about physical harm arising from your activities. Understanding which risk sits where is how you avoid both under-insuring and paying for cover you don't need.

What professional indemnity insurance covers

Professional indemnity insurance responds when a client (or other third party) alleges that your professional work fell short and caused them a financial loss. The trigger is usually a mistake, omission, or negligent advice — not physical harm.

Typical claims include a design error by an architect or engineer, a miscalculation by an accountant, a missed deadline by a solicitor, flawed advice from a consultant, or a coding defect delivered by an IT contractor. A well-structured PI policy generally covers the legal costs of defending the allegation and any damages or settlement you become liable to pay, up to the policy limit. Many wordings also extend to matters such as breach of professional duty, defamation, and loss of documents or data you were handling.

PI is normally written on a "claims-made" basis. That means the policy that responds is the one in force when the claim is made against you, not when you did the work. This is why continuity of cover and "run-off" cover after you stop trading matter so much for professional firms — a claim can surface years after the job was completed.

What public liability insurance covers

Public liability insurance responds when your business activities cause bodily injury to a member of the public, or damage to their property, and you are held legally responsible. The trigger is physical loss or harm, not a professional error.

Classic examples: a visitor trips over a trailing cable at your premises and is injured; a tradesperson accidentally floods a client's kitchen; a falling tool damages a customer's car. PL typically covers third-party injury and property damage claims, along with the associated legal defence costs and compensation, up to the chosen limit of indemnity.

Public liability is a commercial choice rather than a legal requirement. It is distinct from employers' liability insurance, which most UK businesses with employees are legally required to hold under the Employers' Liability (Compulsory Insurance) Act 1969 — that cover is for injury to your staff, not the public.

PI vs PL side by side

Why many firms need both

The two covers rarely overlap — and that is exactly why a business can need both. Consider a construction consultant who visits a client's site. If a flaw in their structural advice later proves costly, that is a professional indemnity matter. If, on the same visit, a piece of their equipment injures a passer-by, that is a public liability matter. One policy would not respond to the other's claim.

Whether you need PI, PL, or both comes down to what your business actually does. If you give advice, design, consult, handle client money or deliver a specialist service, PI is usually central. If clients, contractors or the public come into contact with your premises, staff or physical work, PL is worth serious consideration. Businesses that both advise and operate in the physical world — architects, surveyors, engineers, many trades, some healthcare and wellbeing practitioners — often carry both alongside employers' liability.

Not sure which risks apply to your firm? Get a PI quote and talk it through with Apex →

Is either one compulsory?

Neither PI nor PL is a blanket legal requirement for every UK business, but that isn't the whole picture. For many regulated professions, professional indemnity is effectively mandatory because the regulator requires it. For example, solicitors regulated by the Solicitors Regulation Authority, accountants under bodies such as the ICAEW or ACCA, and firms authorised by the Financial Conduct Authority face minimum PI requirements as a condition of practising. Contracts with clients also frequently specify a minimum PI limit before you can be appointed.

Public liability, by contrast, is generally a commercial decision — though landlords, principal contractors and public-sector clients will often insist on a minimum PL limit before letting you onto a site or into a contract.

Choosing a limit of indemnity

Both covers are written to a "limit of indemnity" — the most the insurer will pay. Common PI options run at levels such as £1m, £2m or £5m, and higher for larger or higher-risk work; PL is frequently arranged at similar tiers. The right limit depends on the size of contracts you take on, any minimums set by your regulator or clients, and the realistic worst-case cost of a claim, including legal defence.

It is also worth understanding whether limits apply "per claim" or "in the aggregate" (a total across the policy year), and how the excess and any policy conditions work. A broker can match the structure to your actual exposure rather than a headline number.

Your duty when arranging cover

When you buy commercial insurance in the UK, you have a duty to make a fair presentation of the risk to the insurer under the Insurance Act 2015. In practice that means disclosing material information — the nature of your work, your claims history, and anything that would influence the insurer — clearly and accurately. Getting this right at the outset is what keeps a policy dependable if you ever need to claim, and it is an area where working with a broker helps.

Common questions

Can one policy include both PI and public liability?

Yes. Many insurers offer combined or packaged commercial policies that bundle professional indemnity, public liability and often employers' liability. They remain separate sections with their own limits and terms, so it's still worth checking that each covers your actual exposure rather than assuming a package is comprehensive.

If I give advice from an office and never meet clients, do I still need public liability?

Possibly not, if no third parties visit you and your work causes no physical risk — PI is likely your priority. But if clients or couriers visit, or you attend others' premises, PL becomes relevant. The safest approach is to map where physical contact with third parties can occur and cover accordingly.

What is "run-off" cover and why does it matter for PI?

Because PI is claims-made, a claim can arrive after you've stopped trading or changed insurer. Run-off cover keeps a claims-made policy responding to past work once you've ceased that activity, so historic clients can still be answered. It's a key consideration when retiring, selling or restructuring a professional business.

Talk to Apex about the right PI and PL structure for your firm →

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for reading your policy wording.

Not trading yet? If the business is new, see our guide to insurance for a new business — and our new-business proposal forms ask what you expect to earn and where you did this work before, instead of turnover history you do not have yet.