Public Liability, Product Liability and Professional Indemnity Insurance

To protect aginst the liabilities that a business can face, the three main types of business liability insurances are

• public liability insurance,
• product liability insurance and
• professional indemnity insurance.

The above mentioned business insurance types differ from one another, but each has it's own importance in protecting the business from liabilities.

Hence, it is very important for businesses to safeguard their investment and to consider the three policies based on the type and need of their business.

Before deciding on what to take you shoukd understand the differences between them.

Public liability insurance

Public liability insurance protects the insured business against the third party claims that could arise due to damage to property, bodily injury or death that have occurred because of operation of the business.

Public liability insurance covers expenses involved in litigation.

If your business happens to be the one involving a lot of customers coming to your business premises, then you should consider taking this insurance.

For instance, if a customer who visits your premises, unfortunately trips and falls at your premises and gets injured, then you will be legally liable to pay him the cost of his medical expenses.

Public liability will cover these costs. Thus, it is very important for your business to be covered under this policy.

Product liability insurance

Product liability insurance is associated with liability resulted due to bodily injury or loss that occurred from the use of a product (defective) you sold.

Thus, if your business is associated with manufacturing, supplying or selling of products, you should consider taking product liability insurance to stay protected against financial claims.

For example, if a toy manufactured by your company is defective and causes harm or injury to your customer, then he can claim compensation for the loss.

This insurance compensates for both legal expenses as well as medical expenses incurred by the insured.

Product liability is only applicable for products that are manufactured or sold, and not for services rendered.

Liabilities arising from services are covered by professional indemnity insurance.

Professional indemnity insurance

Professional indemnity insurance is a compulsory coverage (in many countries) for professionals like lawyers, doctors, engineers, accountants, architects, insurance brokers and financial advisers.

It covers the liabilities arising due to inadvertent negligence, errors, omissions or loss of data by employees while executing the profession.

It also covers factors which are beyond the control of the insured.

For instance, while processing the data of a client, a small fault made by the employee leads to loss of data. In such cases, having professional indemnity insurance bears the expenses to be incurred.

Deciding the right package of business insurance is quite hard.

You should, however, see to it that you purchase insurance to cover every aspect of the risk involved in your business.

The most common insurance cover includes product liability, public liability and professional indemnity insurance.

All three policies are different from each other, but they are intended to protect your business from different risks of claims and liabilities. Hence, ensure that you have proper cover for your business against possible liabilities.