Professional Indemnity Insurance Archives

Guide To Professional Indemnity Insurance

Posted on July 6, 2017 Written by Administrator

Professional indemnity insurance, sometimes referred to as PI insurance, provides protection for professionals who could be the subject of litigation due to mistakes they make.

If you provide any kind of professional service, this insurance may be something that you want to invest in so that you do not have to worry about potential mistakes causing you serious financial problems, nor affecting your reputation.

Why you may need professional indemnity insurance

No matter how careful you are to avoid mistakes when providing a professional service, things can still go wrong. You could provide advice that turns out to be wrong, or you could make a seemingly simple mistake that costs a lot of money for your client to rectify. In such situations, you could find yourself facing a claim for compensation.

Mistakes like this can happen in a wide range of professions, including graphic designers, financial advisors, architects, accountants and many more. Essentially, if you provide any kind of professional advice or service, the risk of making a potentially costly mistake is always there.

This type of insurance provides you with peace of mind in knowing that you are protected in any circumstance. Even if you are not to blame for a mistake, you may still have to defend yourself, and the legal fees can be costly.

In addition, if you work in certain sectors, you may find that clients are only willing to hire your services if you can show that you have professional indemnity insurance in place.

What does it cover?

Professional indemnity insurance can cover a wide range of situations. It essentially covers your legal costs should a claim arise, including solicitor’s fees and legal counsel, as well as any compensation that is due up to a set limit.

The reasons why a claim may be made in the first place could be due to:

loss of sensitive client data;
infringing the rights of a client;
providing professional advice that turns out to be wrong;
making a mistake that is expensive for the client to rectify.

Things to look out for

You may be able to get a specialist policy that is targeted toward your area of expertise. For example, policies may exist that are targeted specifically at accountants, architects, IT professionals, etc.

The cost of the cover can depend on the type of business you run because there is a greater risk of claims being made in some professions. It can also vary depending on the amount of cover you want to have in place, which can range from a few thousand pounds to millions of pounds.

Whether you have had any claims in the past can also affect how much you pay for your policy.

In addition, you may find that you can get extra types of cover added on, including public liability, product liability, employers’ liability and office contents.

Protect yourself in your profession

If you provide any kind of professional service, you may find this type of insurance useful. Even if you always take every care to provide a good service, the fact is that mistakes can happen.

Knowing that you are financially covered for any eventuality can provide you with peace of mind and allow you to focus on your profession without the constant worry of having to defend yourself against claims made against you.

Professional Indemnity Insurance Explained

Posted on July 1, 2017 Written by Administrator

Professional liability cover might form the central plank of many types of business insurance. The extent to which it might help safeguard your own particular enterprise, of course, may depend on just what goods and services you provide.

To help determine whether this might be the kind of protection you need, therefore, the following addresses a number of questions:

what exactly does professional indemnity insurance do?
what types of business might benefit from such cover?
where might you buy it?
does your occupation demand that you are legally obliged to have this cover?

The aim and purpose of professional indemnity insurance

Essentially, this type of cover is designed to indemnify you against allegations of professional negligence and the claims for compensation that may follow.

The extent of any such claim, of course, depends on the severity of the alleged negligence and the monetary value of the damages suffered. Claims of professional negligence, however, may assume quite considerable proportions. In view of this risk, indemnity is commonly offered for claims of up to £5 million or more.

Who needs it?

If, in the course of your business, you offer:

any kind of advice or information, on which your customer acts (by doing something or not doing something) and that action subsequently results in loss or damage, you may be held liable for professional negligence;
that test of negligence of course depends on what it would be reasonable for you to know in the normal course of your business – for example, advice on domestic wiring if you are an electrician, or financial advice if you are an accountant;
if you lay claim to certain qualifications relevant to the services you offer, then the test of negligence may be stricter (given the greater knowledge and understanding you may be assumed to possess);
in order to gain membership of some professional institutions, you may be required to hold what the regulatory body considers to be an adequate level of professional indemnity insurance;
although some types of business – such as accountancy or other consultancy practices, for example – might be obvious examples where professional indemnity insurance may be called for, there are others (fitness instructors or personal trainers, for instance) where this form of protection may also be warranted.

Professional liability insurance may be an essential component of the cover needed for your business. It may not be relevant to every type of enterprise, but wherever there is some risk of a claim of professional negligence, indemnity may clearly prove worthwhile.

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