When it comes to business insurance, the needs of all businesses, large or small, will vary greatly. If you run a business and are responsible for organising your business insurance, you may have heard of Professional Indemnity insurance but have some questions about what it is. Or perhaps you’ve not heard of it and are now wondering if it is something you should be considering for your business.
Professional Indemnity Insurance can be of benefit to businesses of all sizes, as well as freelancers and contractors, as it aims to protect your business if a client makes a claim against you in relation to a mistake in the work or services you have provided which they believe has negatively impacted their business.
Professional Indemnity insurance will typically look to indemnify the legal costs associated with defending such a claim as well as potential compensation payments which may be awarded.
Do I need Professional Indemnity Insurance for my business?
There are many situations in which you may want to consider Professional Indemnity Insurance cover for your business or if you are a freelancer or contractor. And whilst it isn’t a legal requirement it may be right for your business if any of the below apply
You provide advice or an expert service
If there is a mistake in the advice that you give to a client or customer, you may find yourself at the receiving end of a compensation claim for damage caused to their business.
Equally, if you provide an expert service such as designs, plans or calculations as part of your job, mistakes made can be costly for clients to rectify. For example:
• An architect makes a mistake in the calculations or drawings provided which then results in a delay and additional cost to the client to rebuild
• A Marketing agency print leaflets for a client but realise they have made a mistake and put an incorrect web address on it, meaning the leaflet needs to be reprinted.
In both situations you may find that a claim is filed against you in order to cover the costs of rectifying the mistake.
You handle confidential data and personal information
If you handle data for a client, then there is the risk of inadvertent data loss, disclosing data incorrectly, a data breach or mishandling of data. GDPR has put a real focus on adequate data protection and there are large fines associated with misuse of data. Therefore, if you have responsibility for a client’s data you may face a claim of negligence if the worst should happen.
A professional body requires insurance
Many professionals belong to a professional body or industry association. In order to practice, Professional Indemnity Insurance can be a mandatory requirement of some of these bodies and associations.
Whilst not limited to, some of the professions whose associated professional bodies or regulators that require their members to take out Professional Indemnity insurance include:
• Chartered Surveyors
Your clients require you to
In some cases, in order to work with a business a client will require that you have Professional Indemnity insurance in place.
Therefore, as well as protecting your interests (and your clients), having PI cover in place in some circumstances may help your ability to win work and clients.
If you have any questions about whether you require Professional Indemnity Insurance and key risks to cover then do give us a call on 020 8290 9080 or email us at firstname.lastname@example.org. We’ll work hard to get a full understanding of your business and identify any areas and risks that you may benefit from covering with business insurance.