The Importance Of Product Liability And Public Indemnity Insurance


Product liability, public liability, and professional indemnity insurance are all requirements for any business owner selling products or running an establishment open to the public.

Why do you need public liability and professional indemnity insurance?

Keep reading to understand the importance of business insurance that covers you for any claims customers make against your business. This guide will discuss each type of insurance, what happens when you're not insured, and the best practices for finding an insurance provider.

What Is Professional Indemnity Insurance?

Professional indemnity insurance protects your business if you fall short of your customers' or clients' expectations for your products. If your client or customer feels that you have misrepresented your products in your product descriptions or that you have been negligent or made an error in your services, they can file a claim against you.

If this happens, you can protect your business with professional indemnity insurance. The professional indemnity insurance policy covers any compensation you must provide your customers and any legal costs and expenses associated with the claim.

Professional indemnity insurance coverage is ideal for any business selling products online and providing services to clients - ensuring any error or misrepresentation does not devastate the company.

The Importance Of Product Liability And Public Indemnity Insurance

What Is Public Liability Insurance?

Public liability insurance covers businesses that operate from a property or provide professional services to customers. If the professional services offered cause injury or property damage, the customer could make a claim against the business. If the customer receives an injury on your property due to poor signage, dangerous infrastructure, or negligence, they can also file against your company.

Public liability insurance covers claims made against your business for injury and negligence. The insurance will cover claims investigation costs and the expense of settling claims and can help you to access professional advice for claims arising.

What Is Products Liability Insurance?

Product liability insurance is a way for you to protect your business from any claims made concerning your products. If your product harms your customer, causes a third-party injury, or damages your client's property, they can claim against you.

Product liability insurance allows you to cover claims investigation costs, settling claims, and any reasonable and necessary fees associated with the claim. If your customer claims against you and you don't have product liability insurance, your financial situation could become dire.

Public and product liability coverage usually comes as a pair, allowing you to cover reasonable claims against your business for any incidents on your property or any harm caused by your products.

What Happens When You're Not Covered?

Here are some consequences you might face if you don't have public liability insurance or professional indemnity insurance.

Costs And Expenses Could Ruin Your Business

When you don’t have coverage with product liability insurance or professional indemnity insurance, you open yourself up to cover claims against your business if your business caused injury to a customer.

When you're insured, your insurance policy will cover the costs and expenses you face when a customer makes a claim. If you need to pay these claim costs and your legal fees, your business could end up with a dire financial loss that could lead to bankruptcy.

The Importance Of Product Liability And Public Indemnity Insurance

You Could Lose Your Business License

You could lose your business license if you don’t have coverage with professional indemnity insurance or public and product liability insurance. Suppose a regulatory authority is alerted, and you have no insurance to cover claims investigation costs. No support from an insurance company could result in losing your business license and shutting down your business.

You Won't Fully compensate your Customers

It's safe to say that you want your customers to be happy with your products, and causing harm to your customers would make you feel sympathetic. If you don't have coverage, you may be unable to pay your customers the full extent of the compensation they are entitled to.

If you're a cosmetic product company without cosmetic product insurance, your customers may have skin, hair, or appearance damage that requires surgery to rectify. Without proper compensation, this surgery would be unaffordable, and your customer could have insecurities, low self-esteem, and a poor quality of life.

With product liability insurance, you can cover the costs of rectifying injuries and helping your customers to regain their original appearance - rather than live with permanent damage.

Stress And Emotional Overwhelm

When you have access to professional advice through your insurance company, your legal team can counsel you through the claims process. Without this help, you could become overwhelmed, stressed, and drained during the process. Legal procedures are extremely taxing for anyone involved, and it's good to have insurance and support.

Fewer Opportunities

Suppose you're looking to partner up and collaborate with other businesses in the industry. In that case, your lack of public and product liability insurance or professional indemnity insurance could be a turn-off. Other companies may not wish to work with you if you don't have insurance.

Who Needs Product Liability And Professional Indemnity Insurance?

When considering whether you need public liability and professional indemnity insurance for your business, it's a good idea to understand who these insurance policies are designed for and why these businesses need insurance.

Who Needs Public Liability Insurance?

Public liability is best suited to businesses that interact directly with the public. Or, if your business operations take place in a store or building open to the public, you'll need public liability cover. Examples of businesses benefitting from this insurance include beauty salons, hair salons, stores, restaurants, and cafes.

Who Needs Product Liability Insurance?

Any business responsible for manufacturing and selling products to customers needs product liability insurance. This policy is also necessary for businesses that sell manufactured products to other companies or stores for distribution. If the product causes harm to a paying customer or client, then you will be held liable - which is where product liability insurance comes in. Ecommerce businesses, homemade goods stores, and B2B sellers need product liability insurance.

Who Needs Professional Indemnity Insurance?

Professional indemnity insurance protects your business from any claims arising from misinformation or false claims in your product disclosure statement or marketing for your professional services. Professional indemnity insurance covers you when your customers are unhappy with your products and believe you're not marketing them truthfully.

Business types that would most need this kind of business insurance include eCommerce, beauty, fitness, and most businesses offering services or products to their customers.

The Importance Of Product Liability And Public Indemnity Insurance

How To Obtain Business Insurance

If you think you need professional indemnity, public, or product liability insurance, you need to know how to find insurance for your company.

Here are a few best practices to keep in mind:

  • Get quotes from several insurance providers - you need to find the best deal for your insurance coverage, so get quotes from several providers before making your decision. Finding the average cost based on your selections can help determine whether the price is too high or low, indicating overcharging or low-quality services.
  • Understand the factors affecting your insurance cost - your insurance cost depends on various factors that increase your risk of claims, including:
    • The size of your company and how many employees you have.
    • Your level of risk, or how dangerous your product and property can be to customers.
    • Your company address. If you live in a high-crime area, the chances of a customer being harmed on your property are higher.
    • Your claims history. If you have an account of prior claims, this will drive up the cost of your insurance.
    • Your building safety features. Having fire alarms and building sensors can decrease the cost of your insurance.
    • Your policy. The terms of your policy can affect the cost of your insurance due to the extent of the coverage the insurance company agrees to provide.
    • Your credit card history. Your credit score can affect the cost of your insurance as it denotes your financial reliability.
  • Understand your legal requirements - before investing in insurance; you need to look at what kind of coverage you're legally required for your business insurance.


If you're operating an eCommerce business or a store owner, you must consider all three insurance types listed in this post. Not having cover could lead to the bankruptcy of your company and a great ordeal of stress for you if a claim is made against you. Weigh up your insurance options wisely, and invest in insurance that covers you for any incidents, accidents, or customer claims.

Frequently Asked Questions

Here are some frequently asked questions about public liability and professional indemnity insurance.

What Is Public Liability Insurance?

Public liability insurance protects you if a customer receives injury or harm due on your premises. Public liability insurance is often paired with product liability insurance, which protects you if a customer is harmed by one of your products and decides to make a claim.

What Is Professional Indemnity Insurance?

Professional indemnity insurance protects you if your product does not live up to the advertisement or fails to meet the customer’s expectations. If the customer decides to claim against you for misleading advertisement, professional indemnity insurance covers your business.

Why Do You Need Business Insurance?

Without business insurance, being held liable for company mistakes could devastate the business. Legal fees and providing court-mandated compensation could be too costly for your business to survive.