Do I Need Professional Indemnity Insurance?
What is it?
Professional Indemnity Insurance (often referred to as PI Insurance) can cover your legal costs or expenses if a dissatisfied customer makes a claim against your business.
Examples of claims that could be made include:
- Unsatisfactory services were provided.
- Work was not completed to the correct standard.
- A mistake was made that has cost your client money.
- There was a breach of confidentiality or copyright infringement.
- Loss of confidential data.
- Loss due to the advice or service you have provided to a client.
Who needs it?
Professional Indemnity Insurance is designed for service led sectors, such as accountants and financial advisers, business consultants, journalists, engineers, advertising agencies, solicitors or other service professions.
Other professions may need it for specific projects, but ultimately, if you are providing a service to a client, it’s a good idea!
Why do you need it?
Other liability insurance can cover things like bodily injury, property damage or personal injury. Professional Indemnity Insurance ensures you are not out of pocket if someone deems your service unsatisfactory and makes a claim against you.
You may think you have a great relationship with your clients, but one mistake can change the dynamics of that relationship overnight.
How does it work?
Professional Indemnity Insurance is often a “claims made” insurance, meaning that claims need to be made during the period specified in the policy, not when the incident occurs.
For instance, when incorrect measurements on plans caused a house to be built in the wrong place, the builder sued the engineer for damages amounting to £61,000 which was covered by the Professional Indemnity Insurance. This mistake was only discovered after the build was started (not when the mistake was actually made) so the builder could claim the loss of materials and the extra time it would take to rebuild it, from the engineer’s insurance.
What cover do you need?
This depends on whether you are a full-service provider, a partial service provider or just need Professional Indemnity Insurance for a one off-contract.
As a general rule, picture the worst possible scenario if you were to make a mistake for a client or breach copyright laws, add on an estimate for legal fees and losses and you will have a rough estimate for the level of insurance needed. Our business insurance advisors can help you to understand what is needed.
What to do next?
Click here to get a Professional Indemnity Insurance Quote. Or if you need some advice, get in touch.