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Question: Does my public liability insurance cover me for the advice I provide to my clients?
To answer this question we need to first look at what public liability covers.
Basically it will cover you in the event that another person suffers personal injury or property damage as a result of your business activities.
For example if someone tripped over on a wet floor in your retail store and injured themselves, your public liability may cover the costs if the person takes action against you.
Another example could be a carpenter who breaks a window whilst carrying timber through a customer’s home.
What both of these examples have in common is a physical connection between the business and the injured person or damaged property.
But what if there was no physical connection, and the loss was due to negligent advice you provided to a client?
Answer
Public liability does not cover losses as a result of the professional advice or services provided by you and or your business.
For example if you were an accountant and provided negligent advice to a client that resulted in a financial loss, the client may take action against you.
Because the loss was as a result of your advice it would not be covered by your public liability.
But if a client tripped over a loose piece of carpet in your accounting firm’s office, that would be covered as it has nothing to do with your professional advice.
This doesn’t mean your professional services business has to operate without protection in event of a professional failure or breach however.
This is where professional indemnity insurance comes in.
Professional indemnity insurance
A professional indemnity (PI) policy can protect your business in the event that a client suffers a loss as a result of negligence or breach of duty in your professional services.
Occupations such as doctors, accountants and solicitors commonly spring to mind when looking at this form of insurance, but in reality it can extend to anyone who provides advice to clients.
Other common occupations and business types which can benefit from PI insurance include engineers, IT consultants and even midwives.
The good news is that PI is not a particularly expensive form of insurance in most cases, especially for occupations considered to be low in risk.
It is also possible to combine a professional indemnity policy with a public liability policy, providing you with great protection as well as savings on your premiums.
Negligence in the provision of professional advice can lead to just as much damage as physical actions, so if you provide advice to clients it is vital to properly protect yourself.