Professional indemnity (PI) and public liability (PL) are the two liability covers a professional firm is most often asked about, and the two most often confused. Both are third-party liability policies, but they answer different questions. PI asks whether a professional service went wrong and caused financial loss. PL asks whether business activities caused bodily injury or property damage. Under ICOBS 6, an intermediary must give the customer the information needed to make an informed decision, and this boundary is one of the clearest examples of why that matters.
A PI policy responds to claims alleging that the insured, in the course of providing professional services, made an error, omission, or gave negligent advice, and that the third party suffered financial loss as a result. The trigger is a breach of professional duty — the misdrafted contract, the missed limitation date, the incorrect tax calculation, the flawed structural assessment — and the loss is typically pure economic loss rather than physical harm. Cover usually includes defence costs, damages, and mitigation costs. A standard PI wording excludes bodily injury and property damage where those losses are the primary head of claim, because that exposure belongs on a different policy.
A PL policy responds to claims alleging that the business — through its activities, premises, employees, or products — caused bodily injury to a member of the public or damage to their property. The trigger is a physical incident, and the loss is measured in medical costs, lost earnings, or the cost of repairing damaged property. The visitor who slips on a wet floor in reception; the contractor whose ladder falls and damages a client's car; the consultant whose spilled coffee ruins a laptop on a client site — these are PL matters. A standard PL wording excludes financial loss arising from professional advice, because that exposure belongs on the PI policy.
PI is triggered by an error in professional service delivery; PL is triggered by an incident causing physical harm or property damage. PI protects against pure economic loss; PL protects against bodily injury and property damage. PI is written on a claims-made basis in most professional markets, so the policy in force when the claim is first notified responds; PL is typically written on an occurrence basis, so the policy in force when the incident happened responds. PI limits reflect the size of the largest advice or transaction the firm handles; PL limits reflect the size of the largest bodily injury award the firm could realistically face, with £2 million a common baseline.
Worked example — for illustration only. A management consultancy firm invites a client to its office. The client trips on a loose carpet edge in reception, fractures an ankle, and brings a claim for £8,000 covering medical treatment, physiotherapy, and time off work. This is a public liability matter: the loss is bodily injury caused by the firm's premises, and the PL policy responds. The PI policy would decline — there was no professional service and no breach of professional duty.
The same consultant, in a separate matter, advises a client on the tax treatment of a corporate reorganisation. The advice is wrong. HMRC assesses the client for £30,000 of tax, interest, and penalties that would not have arisen had the advice been correct. The client brings a professional indemnity claim. This is a PI matter: the loss is pure economic loss caused by an error in professional advice, and the PI policy responds. The PL policy would decline — there was no bodily injury and no property damage. Both policies were needed; neither one, on its own, would have protected the firm across both incidents.
Most professional firms carry both covers. Where the firm's income depends primarily on advice or service delivery — the day-to-day work of solicitors, accountants, financial advisers, architects, surveyors, and consultants — the PI limit is usually set higher than the PL limit, because the potential financial-loss exposure from a single piece of bad advice can dwarf the bodily-injury exposure at a low-footfall office. PI limits for regulated professions are often set by the relevant professional body's minimum terms — a floor rather than a ceiling. PL limits are usually a commercial judgement, informed by contractual requirements and the nature of the client sites the firm attends.
Some claims contain both elements. A surveyor misses evidence of subsidence; the buyer proceeds; the property later suffers movement and part of the building falls, damaging a neighbouring wall. The report loss is PI. The wall damage may be a PI consequential loss or a PL matter depending on wording and causation. Design-and-build engineers, IT firms operating safety-critical code, and healthcare consultants all face claims that sit between the two. A named broker looks at both wordings together and places cover that closes the gap.
The PI position varies by profession. See our guides for solicitors PI insurance, architects PI insurance, accountants PI insurance, surveyors PI insurance, IFAs PI insurance, and management consultants PI insurance.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.