Professional Indemnity vs Product Liability Insurance
Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-05
The core difference: advice versus objects
The two covers respond to fundamentally different risks, and confusing them is one of the most common reasons a business finds itself uninsured for a claim it assumed was covered.
Professional indemnity (PI) answers for the work of your mind. If a client acts on your advice, relies on your design, or pays for a professional service and then suffers a financial loss because you got it wrong, PI is the policy that responds. Think of an architect whose specification is flawed, a consultant whose report contains an error, or a software developer whose code fails to do what was contracted.
Product liability answers for the physical things you make, supply, sell or install. If a product causes injury to a person or damage to their property, product liability responds. Think of a faulty electrical component that starts a fire, a food product that makes someone ill, or a piece of equipment that injures its user.
In plain terms: PI is about being wrong; product liability is about causing physical harm.
Side-by-side comparison
| Professional Indemnity | Product Liability | |
|---|---|---|
| What triggers a claim | Error, negligence or omission in advice, design or a service | Injury or property damage caused by a physical product |
| Type of loss covered | Financial / economic loss to the client | Bodily injury and damage to third-party property |
| Typical claimant | The client who engaged you | Anyone harmed by the product — a customer or a bystander |
| Who typically needs it | Consultants, architects, designers, accountants, IT firms, marketing agencies | Manufacturers, wholesalers, importers, retailers, installers |
| Basis of cover | Usually “claims made” — the policy in force when the claim is notified | Usually “occurrence” — the policy in force when the harm happened |
The “claims made” versus “occurrence” distinction matters: PI usually requires continuous cover to protect against past work, whereas product liability generally responds to the policy that was live when the incident occurred.
Who needs professional indemnity?
If clients pay you for your knowledge, judgement or a professional deliverable rather than a physical object, PI is usually the priority. It is frequently a contractual requirement — many public bodies, larger corporates and framework agreements will not engage a supplier without it.
Several UK regulators and professional bodies also make PI mandatory for their members. Solicitors must hold cover meeting the SRA’s minimum terms, accountants and chartered surveyors face requirements set by bodies such as the ICAEW and RICS, and FCA-authorised firms have their own minimum requirements under the regulator’s rules. If you belong to a professional body, check its specific standard before buying.
Typical PI buyers include management consultants, architects and engineers, IT and software developers, marketing and design agencies, recruitment firms, and financial or accountancy professionals.
Not sure whether it’s your advice or your products that carry the risk? We’ll match the cover to what you actually do.
Get a PI quote →Who needs product liability?
If your business makes, supplies, sells, imports or installs physical goods, product liability should be on your radar. Under the Consumer Protection Act 1987, liability for a defective product can attach not only to the manufacturer but also to importers who bring goods into the UK and, in some circumstances, to retailers who cannot identify the maker. In other words, you do not have to have built something to be held responsible for it.
Product liability is commonly written as part of a wider commercial combined or public and product liability policy rather than bought entirely on its own. It responds when a product causes physical harm — regardless of whether the person harmed was your direct customer.
Typical product liability buyers include manufacturers and assemblers, food and drink producers, importers and distributors, tradespeople who fit or install parts, and retailers selling own-brand or imported goods.
When you need both
Plenty of businesses sit across the line and genuinely need both policies, because they both advise and supply. Consider:
- An engineering firm that designs a component (PI risk if the design is flawed) and also manufactures it (product liability risk if it injures someone).
- A product designer who advises on a specification and then supplies prototypes or finished items.
- A tech company selling a physical device bundled with software and consultancy.
- A contractor who provides design-and-build services — the design element is a PI exposure, the installed goods a product exposure.
Where the two overlap, gaps are easy to create. A claim that a product failed because the design was wrong can fall awkwardly between policies. This is exactly where a broker earns their keep — arranging the covers so the two policies dovetail rather than leave a hole between them. If your work spans both, it is worth talking it through before you buy rather than after a claim.
Choosing your limit of indemnity
For both covers, the limit of indemnity is the most the insurer will pay. Common options are offered in bands such as £1m, £2m and £5m, but the right figure depends on your contracts, your sector and the scale of loss a single mistake or defect could cause — not on picking the cheapest tier. Contractual requirements often dictate a minimum, and some professional bodies set a floor. If in doubt, size the limit to your worst realistic claim, not your average one.
Common questions
Does public liability cover the same thing as product liability?
Not quite — but they are close relatives. Public liability covers injury or damage arising from your business activities and premises; product liability covers injury or damage caused specifically by your products. They are frequently sold together in one policy, but neither covers the professional advice or design errors that PI handles.
I only give advice and never touch a physical product — do I need product liability?
Usually not. If you supply no goods, professional indemnity is likely the cover that matters, possibly alongside public liability if clients visit your premises. That said, it is worth a quick check — supplying even small physical items or samples can create a product exposure you did not expect.
Can one policy include both?
Some combined or sector-specific packages bundle professional indemnity with public and product liability, which can be convenient. The key is making sure the wordings are aligned so a claim cannot slip through the gap between them. A broker can confirm the covers work together for how your business actually operates.
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 your policy wording.