Professional Indemnity (PI) Insurance is designed to protect an individual, partnership or business that provides a professional service or advice, in the event of a third-party suffering financial loss as a result of a breach of duty in the conduct of their business.
A PI policy will cover the cost of your legal defence in court and any losses or compensation you may need to pay a client following a claim made against you.
Do you need Professional Indemnity Insurance?
In some professions, it is a legal requirement to have Professional Indemnity Insurance, including financial advisers, chartered surveyors, solicitors, healthcare professionals and architects.
Although Professional Indemnity Insurance is not a legal requirement for everyone, it’s worth considering if you are a company or sole trader that offers professional advice, knowledge or skills as part of their services.
As PI Insurance is a symbol of professionalism, it’s also worth considering whether your customer base would expect you to have it. Some clients may require you to hold a certain level of insurance within your contract conditions and others may ask for proof of insurance before working with you. Click here for five reasons why you may need PI Insurance.
What does it cover?
Professional Indemnity Insurance can help protect professionals and cover costs in the event of:
- A client losing money or business as a result of any mistakes that they make in their work.
- A client losing money or business as a result of any advice or consultation that they give them.
- Their work or advice resulting in another company’s reputation being damaged.
- A third-party experiencing losses as a result of them sharing confidential or sensitive information without permission.
- A third-party experiencing losses or costs as a result of them incorrectly using copyright-protected material.
- A client experiencing losses or a damaged reputation as a result of something that they say or write about them.
The claims examples below from Allianz Insurance demonstrate how a Professional Indemnity Insurance policy can protect you in the event of a breach of duty in the conduct of your business.
Claims Example #1
A marketing agency was commissioned to print brochures for a client. However, the agency realised that the web address and contact details used were incorrect after the brochures were printed. Reprinting the brochures costed over £12,000, which was covered by the Professional Indemnity Insurance.
Claims Example #2
An acoustic consultant hired to design the acoustics of a concert hall failed to adequately design the acoustics. The negligent design meant that when the concert hall was fully constructed, the patrons sitting at the rear end of the auditorium could barely hear what was happening on stage. The claim was settled for £35,000, which was met by the Professional Indemnity Insurance.
Need advice?
If you have any questions about Professional Indemnity Insurance or need advice, please contact us today on 02920 853788 or email sme@thomas-carroll.co.uk.
