Employers liability insurance and professional indemnity insurance are not the same thing, and cover very different eventualities. You may need both in the course of your work, as well as other forms of insurance such as public liability insurance.

Professional indemnity insurance applies for circumstances in which you are seen to act in an advisory capacity for a client. Should this advice be perceived as flawed for one reason or another, legal action can arise to claim damages for the financial and wider impact of this. PII is often associated with solicitors, doctors, builders and architects, where the consequences of a mistake can be severe and therefore extremely expensive.

However, professional indemnity insurance applies to a far wider list of professions than those in these industries. Ultimately, if your work results in a loss for a client because it is not of a high enough standard or was otherwise lacking, this could result in costly legal action. This could be just as true of web designers and marketers as lawyers and surgeons.

Employers liability insurance is designed to protect you from claims that arise due to accidents, injury or illness to your employees that occur while they are at work. It covers a wide range of ‘employees’, including volunteers and those who are self-employed but are working under your guidance. Every business in the UK is required by law to have employers liability insurance, which must be at least £5 million. Professional indemnity insurance is required by law for some professions, but is voluntary (if advisable) in others.

Professional indemnity insurance

Since it is more of a grey area that employers liability insurance, you should consult with an adviser as to the level of professional indemnity insurance that is right for your circumstances. Note that PII is not the same as public liability insurance either, which protects you from claim claims from third parties (members of the public who are not connected to your business) who incur loss or injury due to your actions.

Professional indemnity insurance is generally associated with claims that arise due to inappropriate advice, rather than accident or injury. The trend is for such claims to broaden in scope over time. Whereas once they might have been restricted to the medical, legal and architectural professions, they may now occur in almost any field. Imagine, for example, that you have been hired to promote a new company or product, but your work was seen to have harmed rather than increased business. Or that you were hired to photograph a one-off event, but the pictures were for some reason deemed unacceptable by the client. These would both be situations in which professional indemnity insurance was useful.

Employers liability insurance

Unlike professional indemnity insurance, employers liability insurance claims occur when the people you employ you are harmed at work in one way or another. As with PI insurance, there are a huge range of circumstances in which this might be necessary. These include physical harm, such as accidents and injuries that take place at work, but also situations such as discrimination of various kinds (racial, sexual, age and so on), wrongful dismissal, sexual harassment and other eventualities. Employers liability insurance is mandatory and there are harsh penalties in place for companies without appropriate cover: up to £2,500 per day.

Remember that in both cases, professional indemnity insurance and employers liability insurance protect you not only when you actually have done wrong, but when you are perceived to have made a mistake or omission that results in legal action. Even if the claim is eventually deemed spurious, the cost of your legal defence can be enormous and a client or employee can cause significant harm to your business by taking you to court.

Professional indemnity insurance, employers liability insurance, public liability insurance and other forms of cover you may require can generally be bought in a combined commercial insurance policy, which tends to be cheaper than purchasing individual policies.

This article was supplied by the leading firm of Irish insurance brokers and members of the Irish Brokers Association, Robertson Low, established in 1995 and the only Irish incorporated ‘Lloyd’s broker’.