Professional Indemnity (PI) Insurance – Legal vs Civil Liability

Before purchasing Professional Indemnity (PI) insurance, it’s important to understand the difference between legal liability and civil liability. These terms can influence the scope of your insurance policy, including the types of claims covered and the level of protection available to your business.

In this article, we’ll explore the key differences, the types of claims your business could face, and what to consider when choosing the right level of cover.

What Is Professional Indemnity Insurance and Why Does Your Business Need It?

Professional Indemnity Insurance can provide cover for professionals who deliver specialist services, provide skills, or knowledge to their clients. This can help cover the costs from claims arising from incorrect information, negligence or mistakes made. Examples of this include:

• Personal information from a client has been disclosed
• There has been an error in calculations or designs
• Not meeting client requirements
• The information provided was incorrect

Understanding Legal Liability in Professional Indemnity Insurance

If a professional indemnity (PI) insurance policy provides legal liability cover, it will typically protect against claims arising from a breach of professional duty or negligence, subject to the policy’s terms and exclusions.

This means the policy may provide protection if a professional error or omission results in financial loss for a third party. While this offers valuable protection, the scope of cover can be limited depending on the policy’s terms and exclusions.

Therefore, if legal liability is part of the policy, the wording is limited and may not cover claims around breach of contract, intellectual property disputes, or libel. In this instance, you may find yourself without insurance.

What Is Civil Liability Cover?

In contrast, a civil liability policy can provides a wider level of protection with all forms of civil wrongs covered unless clearly excluded in the policy. As well as this, claims involving defamation, breach of contract, breach of confidentiality, and other statutory breaches can also be covered unless stated otherwise.

Legal Liability vs Civil Liability: What’s the Difference?

Many professionals believe that opting for professional indemnity (PI) Insurance policy with Civil Liability wording provides more of a comprehensive protection. Overall, a civil liability policy may provide more protection compared to a standard legal liability policy which may only provide cover for claims arising from professional negligence.

Common Gaps in Professional Indemnity Insurance to Look Out For

Not all PI insurance policies offer the same level of protection. While having this in place is an important step in protecting your business, it’s equally important to understand what your policy does and doesn’t cover. Some common gaps to look out for include:

Speak to an Insurance Broker Before Choosing Your Cover

When purchasing professional indemnity (PI) insurance, it’s important to get the right cover from the outset. Speaking to an experienced insurance broker can help you understand your options and ensure your business has the protection it needs.

Our team of insurance professionals is here to help you find the right policy for your business, giving you confidence and peace of mind.

Get in touch with our team today to discuss your PI insurance requirements.