Professional Indemnity Insurance vs. Public Liability: What’s the Difference

Key Takeaways

• Public liability insurance protects tradies from third-party injuries, property damage, and legal costs caused by on-site accidents.
• Professional indemnity insurance covers financial loss resulting from your advice, designs, or professional errors.
• The two policies cover different risks,  physical incidents vs. professional mistakes, and neither can replace the other.
• Many tradies need both types of insurance to meet client, licensing, and site entry requirements.
• All Trades Cover offers tailored, trade-specific advice to help you combine both policies without paying for unnecessary extras.

Even the best tradies know things don’t always go to plan. A simple slip-up, a bit of bad advice, or an on-site accident can end up costing a whole lot more than just time.

That’s where the right insurance can be a game-changer for you and your business. But with so many options, it can be tricky to work out what’s actually got your back. Two of the most important covers in the trade game are Public Liability and Professional Indemnity Insurance.

They might sound similar, but they protect you from very different risks. And in this guide, we’ll help you understand the differences between professional indemnity vs. public liability insurance. We’ll explore what makes each unique, show you some real-world examples, and explain when you might need one, the other, or both.

What is public liability insurance?

Public Liability Insurance is one of the most common covers tradies carry. And for good reason. Essentially, it’s there to protect you if your work accidentally injures someone or damages their property.

Think of it like your financial backup plan. The thing that keeps a stuff-up from becoming a shut-down. Put simply, you hope you never need it, but if things go sideways on site, it keeps you standing. Even the sharpest tradie can have a slip-up. And when they do, the costs can get ugly, fast.

Why it matters

• Third-party injuries: If a client, supplier or even a random passer-by cops an injury because of your work, you’ll be the one paying for their medical costs and any legal claims unless you’re covered.
• Property damage: Bust a pipe, put a hole through the wrong wall, or accidentally crack some tiles, and those repair costs are on you without cover.

• Legal costs: If the injured party takes you to court, Public Liability Insurance can also cover the legal expenses involved in defending yourself.

Real-world trade examples

• Painter: You accidentally knock over a tin of paint, spilling it across a client’s brand-new timber floor. Public Liability Insurance can help cover the repair or replacement costs.

• Builder: A section of scaffolding collapses and damages the neighbour’s car parked on-site. You’re covered for the property damage.

• Electrician: A client trips over your extension lead, breaks their wrist and decides to sue. Public Liability steps in to cover medical costs and legal fees.

What happens without public liability insurance?

You’d be paying for everything out of your own pocket, and even a ‘small’ accident could end up costing tens of thousands. In bigger cases, like serious injuries or property damage, it could easily run into the hundreds of thousands.

That’s why most sites, councils and contractors require tradies to have Public Liability Insurance before they’ll even let you start work. It’s not just peace of mind; it’s often a ticket to the job.

What is professional indemnity insurance?

Professional Indemnity Insurance protects you if a client loses money because of something you advised, designed or signed off on. It covers financial loss caused by professional errors, such as incorrect advice, reports, design work, or documentation, not physical accidents or property damage.

Basically, it’s there to cover the financial fallout of mistakes, oversights, or dodgy advice that can cost your clients money and could otherwise come out of your own pocket

To sum up the main differences:

• Public liability = covers accidents that cause injury or property damage.
• Professional indemnity = covers financial loss caused by your work, advice or plans.

Why it matters

• Bad advice: If your advice leads to a client losing money, they can chase you for the costs.

• Design or documentation errors: If your plans, drawings or reports are wrong, and the client has to pay to fix the mistake, you could be liable.

• Negligence: If your work doesn’t meet expected standards and costs your client money, you may be held responsible.

• Legal costs: If it ends up in court, professional indemnity can cover not just the claim but also the lawyer’s bills to defend yourself.

Professional tip

Even if you don’t usually give formal advice or designs, there’s still a chance a client could act on something you’ve said (even casually) and hold you responsible if it leads to a financial loss.

That doesn’t automatically mean you’ll be liable, but professional indemnity insurance helps protect you in those grey areas, where your experience or recommendation might be relied on more than you think.

It’s a smart safeguard for tradies taking on more responsibility, especially when projects involve planning, materials selection, quoting on design specs, or overseeing other contractors.

What happens without professional indemnity insurance?

You’re left to pay out of your own pocket for claims, compensation and potentially huge legal bills. For tradies who provide designs, advice or reports, even occasionally, that could put your business and personal finances on the line.

Public Liability vs. Professional Indemnity — Side by Side

Now that we’ve broken down what each policy covers on its own, let’s put them side by side. Seeing the differences in one place makes it much easier to work out which cover is right for your trade.

Do you need both covers?

Most of the time, yes. It’s not one or the other. They cover totally different risks.

Here’s how it usually plays out on site:

• Public liability: A site or council won’t let you through the gate without it.
• Professional indemnity: A client can demand it if you’re providing designs, plans or recommendations.

Carry only one, and you’re leaving gaps. You might land a job because you’ve got public liability, but if the scope includes reviewing plans and something goes wrong, you’re not covered under that policy.

Together, they’ve got both bases covered. For instance, you might win a contract on a commercial site because you hold public liability, but if the scope includes reviewing plans and something goes wrong with your advice, you’d have no cover under that policy. Together, public liability and professional indemnity cover both sides of the coin — the physical accidents and the professional mistakes.

For many tradies, having both isn’t just about protection. It’s about credibility. When you can show you’re fully insured, you stand out as professional, prepared and safe to work with.

Cover all bases with the right protection for your trade

Accidents, advice and mistakes can all put your trade at risk in different ways. That’s why many tradies need both public liability and professional indemnity insurance. One covers you when things go wrong on-site, the other when your advice or designs lead to unexpected costs.

At All Trades Cover, we’ll help you figure out what’s right for your trade, whether it’s one policy, both, or a tailored package that keeps you fully protected. Our brokers know the industry inside out, and we’ll make sure you’re not paying for extras you don’t need.

So if you’re ready to protect your business from every angle, get in touch with All Trades Cover today and get the right cover, done right.

Frequently asked questions

1. How much Public Liability or Professional Indemnity cover do I need?

The level of cover depends on your trade, the size of your jobs, and any site or client requirements. For example, some councils and commercial sites won’t let you on-site without at least $10 million Public Liability. 

Professional Indemnity limits can also vary depending on the type of advice or design work you do. An experienced broker can help tailor the right amount so you’re not under- or over-insured.

2. Does my cover extend to subcontractors working under me?

Not usually. Most policies only cover your business and employees, not subcontractors. If a subcontractor causes damage or gives bad advice, you could still be held responsible.

This is why many sites require subs to carry their own insurance. Always check your policy wording and confirm everyone on site is properly covered.

3. Can I claim both Public Liability and Professional Indemnity on the same incident?

In rare and complex cases, an incident may involve both, but you usually can’t claim under both policies at the same time. It depends on what actually caused the loss and how the claim is assessed.

For example, a project might start as a property damage claim (Public Liability), but during the investigation, it becomes clear the damage was due to faulty advice or a design error, which would fall under Professional Indemnity instead.

That’s why it’s important to have both types of cover in place. There’s no overlap, but no gaps either and your broker will help determine which policy applies and make sure your claim is handled the right way.