Your clients may make important business decisions based on the advice or data they’ve paid you for.
Professional indemnity (PI) insurance protects your business if a client sues for losses they claim you were responsible for due to error or negligence.
Professional services can include:
Design work
Advice or consultations
Accountancy and financial advice
Marketing and graphic design
Engineering
Surveyors
Healthcare workers
You might not think you need professional indemnity insurance, but a wide range of service companies are potentially at risk.
PI insurance covers potential legal and compensation costs you might incur if a client sues you after using your professional services. The types of risks covered could include:
Breach of contract
Professional negligence
Design errors
Intellectual property and trademark disputes
Plagiarism
Defamation
With PI insurance you can usually buy cover from around £50,000 up to £10 million or more for legal fees or compensation costs. Bear in mind that even if the claim against you is unsuccessful, you’ll probably incur legal costs while fighting it.
PI insurance isn't compulsory. But that doesn’t mean it’s not a necessity. Should a claim be made against you for malpractice or negligence a PI policy would cover:
Your legal defence fees
Compensation costs if the claim was successful
Some clients may ask whether you have PI insurance before they will work with you. It can be a requirement before entering into a contract.
If you're a member of a professional or trade body you're also likely to need PI insurance as a condition of membership. Relevant bodies will be able to advise on how much you need.
You should consider PI cover if you have access to confidential client information. Also if you give advice as a consultant or freelancer, deal with software or intellectual property, or provide copywriting or article-writing services.
The cost of professional indemnity insurance varies depending on factors such as:
Your turnover
Industry
Number of employees
Your business location
Depending on the size, reach and nature of your business you could pay from less than £100 to several £1,000s a year in PI insurance payments.
You can see how much your professional indemnity insurance will cost by starting an online quote – it typically takes less than 10 minutes.
As professional services vary widely. Find an insurer who specialises in your industry.
A flexible policy can be tailored to your business needs, so that as your company expands, more cover can be added if necessary.
You may need protection against issues such as:
Negligence
Data loss
Failing to protect client confidentiality
Cyber breach
Financial loss
You may also want cover for claims around defamation and intellectual property. This is particularly important now that businesses are actively promoting themselves on social media.
When you take out professional indemnity insurance your cover typically starts from the day you pay for protection.
Therefore, you can't buy cover for an event, piece of advice or issue that arose before the insurance policy came into force. The exception is if your insurer agrees to cover you from a specific date in the past, which is known as a retroactive date.
When you compare quotes, look at:
Does the policy cover everything you need it to?
Can you add to or change the policy as your business changes or expands?
How long do you need cover for?
How does the insurer handle claims, and how quickly might you receive a payout?
Cheap professional indemnity insurance is not necessarily the best option. Instead, you need to find a policy that covers your business needs, and provides sufficient cover to protect you in the event of a claim.
With Superscript, making a claim simply requires you to sign in to your online customer account and submit a claim. You'll have to provide details about the claim such as the date of loss and the type of claim being made against you. Providing as much documentary proof as you can will help your cause.
Once the claim is submitted, Superscript will contact you as the first step in processing your claim. From there it can take a few days or weeks for your claim to be settled based on size your of your claim.
Professional indemnity insurance shields professionals from potential liabilities, preserving trust and credibility. It protects your business from unforeseen risks, safeguarding reputation and providing peace of mind in service delivery.”Salman Haqqi, Senior Editor - Personal Finance
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