What is Professional Indemnity Insurance?
If you are a professional who provides professional services in the UK, you are open to potential lawsuits against you regarding the services you provide. Someone can claim that you provided inadequate services, design or advice, and the result was that thy received financial losses.
This type of lawsuit can be devastating to a professional person or organisation. Top insurers recognise this threat and offer professional indemnity insurance as a defence for professionals against such lawsuits. PI insurance will cover legal costs and expenses incurred defending you, and any damages that are awarded.
Are You a Candidate For Professional Indemnity Insurance?
Many professional regulatory bodies require that the professionals in their industry have professional indemnity insurance because of the risks. However, if it is not a requirement in your industry, the risks of not having it can far outweigh any costs you pay to get it. In terms of guidelines for the types of businesses that most need it:
- You are an engineer, architect, designer who provides drawings or designs to clients.
- You want to protect yourself against any mistakes or allegations of unprofessionalism of the types described here, that might arise in your working relationship with clients.
- You give professional advice to clients such as business, financial or management consultants.
- You provide professional services where there is the expectation of a specific outcome. Such as teachers, fitness trainers, or yoga instructors.
- You are a consultant, freelancer, contractor or another self-employed professional, and you deal directly with clients. In this instance, you are exposed. Some clients will insist that you get PI Insurance as a protection measure for them, so there is recourse in the event you cause damage.
What Does Professional Indemnity Insurance Cover?
PI Insurance covers a range of issues that might occur in your daily business activities. These include:
- Infringement – You might be accused of infringing on a copyright or trademark.
- Breaching Confidentiality – Professionals are often held to high standards of confidentiality. If you or someone working for you disseminates confidential information of any employer, you can be sued.
- Error – many professionals provide data to their clients. If you send out information that is inaccurate and your client relies on this data to make an important decision, and as a result, is damaged financially, you can be sued.
- Negligence – such as client work you’ve carried out that hasn’t met the specified requirements, causing them to lose money or suffer an injury.
How Much Cover Do You Need?
This can be difficult to determine. However, you should weigh the costs you would need to defend yourself against a suit. Your insurer can assist in what amount would likely be sufficient. Take their professional advice to make sure that you are covered properly.
Professional Indemnity Insurance is a very important product for those who provide professional services. Operating without it puts you needlessly in harm’s way. Take steps now to protect yourself and your livelihood. You can’t control the unexpected, but you can be prepared with the right insurance cover.