A Professional Indemnity (PI) Insurance policy covers an individual, partnership or a business that has caused a third party to suffer a financial loss due to a breach of duty in the conduct of their business. The PI policy will defend you or compensate third parties following your professional negligence, such as providing an incorrect design, drawing or advice.
It is a regulatory requirement for many professions, such as chartered accountants and chartered surveyors, insurers or solicitors to hold PI Insurance to practice. However, in today’s world many other trades are now finding that they also require this protection. Having a PI Insurance policy demonstrates the professionalism of a business and it’s becoming increasingly common for clients to request that PI cover is in place in order to win a contract.
Each time a professional gives advice or offers a service for a fee, they are potentially vulnerable. If they don’t have PI Insurance, their financial position could be threatened. Below, we’re sharing 5 reasons why professionals may need PI Insurance.
1. Possibility of mistakes
It is important to remember that mistakes can happen, despite professionals taking every action to give the best advice or service possible to their clients. This can bring forth large legal costs and compensation claims. PI insurance covers negligence and will protect against allegations made.
2. Employee negligence
The way in which employees carry out their work is down to them and out of the company’s control, even if they’ve had extensive training. In the event of employee negligence, PI Insurance will protect a company against liability claims.
3. Intellectual property (copyright, patent, trade secrets or trademarks)
If a professional was to unintentionally produce materials that infringed intellectual property rights, such as using images on their website without the owner’s consent or copyright video footage in a presentation, it could lead to litigation for copyright. PI Insurance would protect them against legal costs and compensation.
4. Duty of care
Clients expect the highest standard of service and professionals owe a duty of care to anyone who is relying on them for advice or a service. These days, clients are far more likely to take action if their standards have not been met, but PI Insurance would protect against such claims.
5. Defamation cover
An accidental lapse in judgement could result in a defamation claim for professionals. For example, if they make a comment that could be perceived as negative or slanderous about a client. Social media is suspected to be contributing to the rise in defamation claims. In the event of a claim, PI Insurance will protect them.
If you’re running your own business, there are a lot of factors to consider and for busy professionals, the need to give the right advice and provide a service of a high standard are the main responsibilities. If a claim is brought against you, Professional Indemnity Insurance will take away the legal and financial worries so that you can get on with business as usual.
Need advice? Contact our small business insurance team today on 02920 853788 or email sme@thomas-carroll.co.uk.
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