Professional Indemnity Insurance

professional indemnity quotes

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What Is Professional Indemnity Insurance?

Anyone who owns or runs a business needs to know about professional indemnity insurance. Also known as PI insurance or professional liability cover, it is important to understand what this protection is for and whether your business needs it or not.

The purpose of this type of policy is to protect you and your business against claims for various things related to professional negligence. It is entirely separate to public liability cover or employee liability insurance. If you offer any type of professional advice to clients, there is a risk that you could have a claim filed against you for any loss resulting from poor advice, or from any omission on your part. This also applies to anyone employed by you or acting on your behalf.

The sort of things that PI insurance protects you from are:

Giving bad advice or omitting to give appropriate advice, leading to a loss of income or increased costs for the client.

Legal costs and other expenses involved in fighting a claim for negligence against you, as well as any compensation and costs that you are required to pay if you lose.

Loss of or damage to a client’s data or documents.

Loss of money or goods.

Misuse of information or unintentional breach of confidence.

Unintentional infringement of copyright or other intellectual rights.

Claims of defamation or libel.

Do I Need PI Insurance?

PI insurance is not compulsory for all business, but a few specific areas of professional practice are required to have it by law. These include solicitors, accountants and architects. So unless you fall into one of these categories, you will need to make a decision on whether it is necessary for your business.

If your business involves any of the following activities you ought to seriously consider having professional indemnity insurance in place:

  • If you offer any form of professional advice to clients.
  • If you handle data or documentation belonging to your clients.
  • If you have any responsibility for dealing with material which is copyrighted or which is the  intellectual property of your client.

Basically if you provide a professional service or advice and this could be challenged in any way, it is probably sensible to have indemnity protection in place.

Do Home Workers Need Cover?

Professional negligence will not be covered by other business or household plans, so even if you work from home and employ no-one else, ensure you have an appropriate indemnity policy in place if you offer professional advice. While people working for themselves from home can sometimes do without other insurances such as public liability cover, if you are providing professional advice to anyone it is important to have proper PI policy in place.

How Much Cover Do I Need?

The level of cover you require will vary depending on the size of your business (turnover) and the nature of your business. Most policies will offer cover from about £50,000 up to £5million.

Even if you retire or sell your business, you ought to have a policy in place that gives you protection against claims arising for work carried out in the past. The same applies if you are taking out a policy where you have been working without PI cover in the past. You will need to ask for full retroactive cover in these circumstances, which may have an increased premium.