Posted on: 20 April 2022
Professional Indemnity Insurance Explained
If your business is providing advice, design, skills or knowledge in a professional capacity, or handling intellectual property, your clients rely on your expertise and guidance. Your business is responsible for getting it right.
Professional indemnity insurance, often referred to as professional liability insurance or PI insurance, is a business insurance cover that can insure business owners against their legal liability to compensate third parties for injury, loss or damage due to a breach of duty in the conduct of their profession. If you don’t already have professional indemnity cover in place, here are 10 reasons why you should consider this essential cover:
1. Mistakes can happen
As a business owner, you strive to do the best for your customers. However, mistakes can happen, which may leave you open to compensation claims and associated legal expenses. Negligence is a core cover for Professional Indemnity policies and could protect against allegations made.
2. Cover may be compulsory for your industry
For many professions, it’s a regulatory requirement to have professional indemnity insurance in place. Just some of these professions include:
- Financial advisers
- Chartered surveyors
- Care & medical professionals
Not having this cover could mean your business is a risk of being stripped of its regulated status, making it difficult to operate.
While you may not be legally required to have Professional Indemnity insurance in place, you may wish to consider this cover for your business if you are doing any design work, providing a service or advice, or handling intellectual property or third-party data on behalf of your clients.
3. Intellectual property infringements
Unintentionally producing materials that infringe intellectual property rights, for example, using images to promote a business without the image owner’s permission, could lead to the company being sued. Professional indemnity can protect a company against these legal costs.
4. Cover required to secure contracts
Many clients may perceive that having professional indemnity insurance in place demonstrates a business is run professionally. Consequently, it’s becoming more common for customers to request proof of cover before signing a contract.
5. Financial vulnerability
If you provide advice or a service for a fee your company could be vulnerable to claims from customers. Could your business afford to settle a large, unexpected claim? Professional indemnity insurance helps protect a company’s financial vulnerability.
6. Handling sensitive data
Even with adequate data protection and procedures in place, data can sometimes accidentally get lost. Professional indemnity insurance could cover the cost to replace or restore any damaged or mislaid documents including electronic or digital data.
7. Employee mistakes or negligence
As a business owner, you rely on your employees to do the right thing. Even with extensive staff training, the way employees carry out their work activities is sometimes beyond your control, leaving you exposed to liability claims. Professional indemnity insurance can give peace of mind in the event of an employee’s negligence.
8. Your duty of care
Your customers expect a high standard of service. Increasingly, customers are more inclined to resort to legal action when they believe there’s been a lack of duty of care. Professional indemnity insurance can protect against such claims.
9. Peace of mind
There’s a lot to consider when running a business. Professional indemnity cover takes away the legal and financial worries should a claim arise out of a breach of professional duty to ensure your client’s businesses continues to operate as usual.
10. Defamation cover
As a business owner, there’s a lot to consider, especially the responsibility of getting things right. Professional indemnity cover takes away the legal and financial worries should a claim arise out of an accidental lapse in judgement which results in a defamation or libel claim.
Professional Indemnity Insurance arranged by Premierline
We understand that running your own business often leaves little time for much else. That’s why we work closely with some of the UK’s leading insurers to find the cover that’s right for you, making arranging your professional indemnity insurance simple and hassle-free. We’re committed to finding the right insurance solutions for your business to let you work without worry and focus on what really matters – your business.
To find out more about professional indemnity insurance, call Premierline today or arrange a call back to speak to an insurance advisor
The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.