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Professional indemnity insurance covers you on what’s known as a ‘claims made basis’. This means that you need to have a current policy on the date that a claim is made against you, regardless of when your services were provided.

Both of these insurances provide protection for your business against legal action and compensation awards to third parties, but they offer different forms of protection for your business.

Public liability insurance protects your business against claims (from your customers or members of the public) for any personal injury or property damage that they suffer from (or claim to have suffered from) due to your negligence (either at your work place or another location). An example of a claim would be if someone injured themselves after slipping on some water that was on the floor of your place of business, and there was no ‘wet floor’ sign to warn people of the potential hazard.

Professional indemnity insurance protects your business against losses or damage from claims taken against you arising from any professional services or advice that you provide. Examples of claims could be:

• Giving unprofessional, incorrect, inadequate, or inappropriate advice
• Breaching your professional duty of care by accidental omission, or making an error
• Acting against your customer’s instructions

Business insurance covers you for material damage losses that occur from an unexpected event like theft, a storm, fire, or accidental damage. You can typically get cover for damage or theft of office contents, stock, damage to buildings, cover for portable values, glass, money and machinery breakdown. If your business can’t operate due to an unexpected event, you can also get cover for financial loss—this is generally called ‘business interruption insurance’.

All insurance policies have exclusions to help keep premiums affordable and minimise risk for the insurer.

For business insurance, you’re generally not covered for material damage or financial loss from:

• Deliberate acts
• Floods unless specifically included in your policy
• The use of a vehicle
• Known circumstances prior to your policy starting
• Giving negligent professional advice or services

For professional indemnity insurance, you’re generally not covered for damage or loss from:

• Known circumstances prior to your policy starting
• Disputes about contracts or your service fees
• Fraud or illegal activities
• Deliberate acts
• Personal injury or damage unless caused by your breach of professional duty

For public liability insurance, you’re generally not covered for damage or loss:

• To your premises
• From injuries suffered by your employees
• From insured events that occurred before or after your policy period
• From giving negligent professional advice or services

The above are just some general exclusion examples and are by no means the full list of what’s not covered. It’s important that you’re aware of everything your policy doesn’t cover. Make sure you read the policy’s wording or Product Disclosure Statement first for all the details.

All businesses regardless of industry, size, or location face many risks on a daily basis, so it’s important that you understand your particular risks and whether you’re prepared for these risks. Being prepared means you’re able to minimise any loss or damage from exposure to these risks as much as possible, so that your business can continue to operate with little disruption. Usually, this means having some form of business insurance in place to protect your assets, customers, and your earnings.

When it comes to business insurance, the type you need will largely depend on what type of business you operate, its size, where it is, and how risk averse you are. For example, if you’re a café operator, your business insurance needs would be different to a sole tradesperson, or a business that operates from home.