Professional Indemnity Insurance
Professional indemnity insurance, often referred to as professional liability insurance or PI insurance, covers legal costs and expenses incurred in your defence, as well as any costs that may be awarded, if you are alleged to have provided inadequate advice, services or designs that cause your client to lose money.
Many professions need to have professional indemnity insurance as part of their respective industry body’s regulatory requirements. Even if you are not obliged to have PI insurance, without it, you could be liable for thousands of pounds worth of legal fees and compensation payments – not to mention lost income from the time spent defending any allegation. If this is the case, then the level of minimum level of indemnity will be decided for you.
When you buy insurance, whether it’s for your home or your business, you’ll be asked how much cover you want to buy for professional indemnity insurance, it can be harder to estimate how much cover you’ll need for your business. And because each business is unique, there’s no one-size-fits-all solution.
But if you have to work out cover for yourself, here are three things to consider:
- Size of the contract you are undertaking and the size of the client you’re working for
- Potential costs to defend yourself if it came to the worst
- Maximum compensation that could be awarded against you (think about the fees you are being paid and, perhaps, multiples of this)
When work is going well it can be hard to envisage a scenario where your client is unhappy enough to sue you – for thousands, or even millions, of pounds. Unfortunately, you can’t predict the future and even the happiest of work situations can turn sour if what is delivered does not meet client’s expectations. Also once you stop trading, you should consider run-off cover to cover work you have done in the past.
Typical features our Professional Indemnity solutions may include cover in respect of;-
- Industry-specific policies to suit the risks you face in your profession
- Choice of limits of Indemnity
- Where required wordings will comply with the relevant governing body’s minimum standards and requirements
- Your own losses from dishonesty by a director, employee or self employed freelancer contracted to you and under your supervision
- Loss of professional documents
- Defamation (libel and slander)
- Infringement of intellectual property rights like copyright or trademark
- Negligence: you may fail in a duty of care to your client, perhaps giving incorrect advice or making a mistake in your work
- Cover can be arranged on a Civil Liability basis, which is the widest form of cover available which means that if a claim or loss occurs because of your business and it isn’t specifically excluded, it’s covered.
- Direct Debit monthly payment plans available