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.