Don’t Get Caught Out: The Importance Of Professional Indemnity Insurance

Any individual whose business provides advice or offers a professional service to clients should consider taking out professional indemnity insurance. This insurance is designed to cover you in the event you are proven negligent or make a mistake that results in financial loss for your client. Professional Indemnity is utilised by a wide array of professionals, advisers, and tradesman to safeguard their finances from a potential lawsuit.

What Does Professional Indemnity Insurance Cover?

Generally speaking, professional indemnity insurance covers you against act of negligence. Depending on your profession, this can mean any number of things. For example, if you are an architect and make a mistake in the design of a construction project, it could cost the parties involved millions of pounds to start over after building has begun. The architect would be liable for the cost of rebuilding as well as the wasted materials used in the project.

Another common example is the case of a financial adviser offering negligent or misleading advice. If, for instance, a broker suggested a retiring couple would be better off investing in high risk stocks, if the couple were to lose their savings they could sue the broker for negligent advice. Medical and IT professionals would also fall under this umbrella, or any type of therapist dealing with situations where they are making recommendations to their clients based on their expertise. As the act of consulting ultimately comes down to a professional opinion, it is not uncommon for lawsuits to occur when clients become dissatisfied with the results.

Another instance where professional indemnity insurance comes into play is with breaches of confidentiality. If your business holds sensitive customer information and unwittingly releases that to a third party, you could be liable for the damages. To recap, you will likely need professional indemnity insurance if you do one of the following:

  • Provide advice to customers
  • Handle data owned by a business or a client’s personal information
  • Are responsible for handling a business’ intellectual property
  • Perform work whose credibility can be challenged

What Does Professional Indemnity Insurance Pay For?

Although policies will differ from company to company, most insurers will offer some form of the following features:

  • Payment of the claim up to the agreed upon limit, including legal costs in fighting the lawsuit. Most insurance companies will offer a minimum of £50,000 for professional indemnity cover and a maximum of £5 million. The figure you choose depends on the level of risk associated with your business.
  • Excess payable by the policy holder. Most insurance companies allow you to stipulate and excess anywhere between £250 and £5000. Naturally, as with most insurance types, the higher the excess the lower your monthly premiums.

Regardless of what type of indemnity cover you choose, make sure to check for exclusions. As each profession has different risks, some insurers might gear their policies to avoid protecting certain business types. Make sure you are getting a policy that covers your legal expenses and addresses the risks specific to your business when asking for a quote.

Make Use of Online Comparison Sites

The best way to find cheap and affordable professional indemnity cover is to make use of an online comparison site. These whittle your choices down based on location, price, and insurance type, providing you with extensive research and data at the click of a mouse.

Moreover, rather than slog from site to site repeating your business information, you need only enter your information once, and in many cases, you can purchase your insurance directly through the comparison site. Online comparison sites provide an easy and effective way to research professional indemnity insurance.

Protect Yourself & Your Business From Compensation Claims With Liability Cover

In an increasingly litigious society, even the healthiest businesses can fall victim to a single claim. Public liability insurance is designed to safeguard your company from a lawsuit resulting from an injury or property damage to a third party.

What is Public Liability Cover?

If negligence by you or an employee results in an accident to a member of the public, you will likely be liable for whatever costs are incurred by the injured. This includes medical expenses, personal hardship, and legal fees resulting from the claim. The total cost of such an incident can escalate into the millions of pounds. As a result, it is essential for most businesses to take out a public liability policy to protect them from a potential claim.

What Does Public Liability Cover?

Typically, a public liability insurance policy will cover any damages awarded to the claimant. This includes legal fees, miscellaneous expenses, and the amount you owe to the NHS for any medical treatment given to the claimant.

What Doesn’t it Cover?

Public liability insurance applies only to claims brought about by third parties and members of the public. In other words, it does not cover claims brought forth by your employees or staff members. For that, a separate policy called Employers’ Liability Insurance must be purchased. As such, the two offerings are often bundled together by insurance providers.

Who Needs Public Liability Cover?

For some businesses, the purchase of public liability is mandated by law. For others, it may not be compulsory by legal standards, but something clients expect when dealing with a business. Generally speaking, public liability insurance is ideal for any business that interacts with members of the public or third party clients.

Where Do You Obtain It?

Like most forms of insurance, public liability insurance can be obtained through the internet via price comparison websites. However, you can also use the internet to find a broker who can adequately assess the risks that are unique to your business. As no business is the same, knowing where you need coverage and where it is superfluous can help you maximise your savings. Many insurers may be willing to negotiate the cost of cover based on your situation.

Be sure that any broker you consult with is a member of the British Insurance Brokers’ Association (BIBA). Furthermore, any insurance company you deal with should be a member of the Association of British Insurers.

How Much Will it Cost?

The cost of a policy will depend on your business’ individual risk factors, as well as the claim history of your company. You may be able to lower costs by taking extra safety measures or having safety courses taught to your employees. Consult with your broker regarding the best way to keep costs down while at the same time protecting your business in the event of an accident.

Why Business Insurance Should Be Of Major Importance To Any Small Business Or Firm

For any sole trader, small business, or self-employed individual, business insurance should be an integral part of your operational expenditures. As a single incident can jeopardise your career and your livelihood, the relatively small cost of a monthly premium is worth the risk for both protection and peace of mind.

While having a smaller business or being a sole trader means you run a relatively low risk of a lawsuit, it also means having cheaper premiums for comprehensive protection. The following will outline the types of insurance and why it is imperative for any business, regardless of size, to have it.

Public Liability Claims

Being a sole trader means dealing with third party individuals, whether they are clients or members of the public. If your insurance covers you for public liability, you will be protected against any legal claims resulting from injury or damage to property while you are carrying out business activities. While it is not compulsory by law, it will give both you and your clients the peace of mind to do business together.

Accidents Affect Sole Traders

Just because your business is small doesn’t mean it is immune to accidents. For instance, if you are working as carpenter and accidentally put a nail through a pipe that results in extensive water damage, you will be responsible for the cost of repairs. If a roofer drops a tile and it lands on a passer-by, they would be responsible for the medical bills.

Another example would be a self-employed technician who loans most of his technical equipment from a third-party. In this instance, if he drops and damages the property, the self-employed individual would be liable for the repair.

Amount Of Liability Cover Required

The amount of insurance required is entirely dependent on the type of business you run, the size, and the turnover. With sole traders, it is important to get the proper cover as opposed to the cheapest one, as many of the lower priced policies are riddled with exclusions that leave you unprotected.

With a small business, your primary focus should be on building the business and the brand as opposed to worrying about potential accidents. Having a comprehensive insurance policy will allow you the peace of mind to concentrate on building clients. Furthermore, having a reliable insurance policy will do the same to potential clients, as they won’t have to worry about being compensated should something go wrong.