Professional Indemnity Insurance, what’s it all about? You might think that Professional Indemnity Insurance is the preserve of doctors, lawyers and other traditional professions, but its relevance and usefulness goes far further than that.
In fact, if you provide a specialist service or advice to anyone, it may well be in your best interests to take out just such an insurance policy. Professional Indemnity Insurance provides cover for professionals in the broadest sense (and their firms) if they make an error that causes a loss to another person while providing their professional services. So if the service you’ve provided is deemed to have been inadequate in some way, it could help you.
What does Professional Indemnity cover?
Professional Indemnity Insurance can assist you in a number of eventualities, covering a broad range of risks associated with the delivery of your work. For instance, if you’ve been professionally negligent in some way; you’ve made an error, omission or a mistake in a piece of work for a client, then it could be of assistance.
Also, if you’ve unintentionally breached the copyright or the confidentiality of a client, or you’ve lost their data or documents, it could help. Of course, this list is not exhaustive and every policy, provider and claim differ, but it gives you an idea of the wide variety of circumstances in which Professional Indemnity Insurance could provide cover.
Reassurance when you need it most
Professional Indemnity Insurance offers reassurance, meaning you can concentrate on the job you love, knowing you have a safety net in place - just in case.
Having Professional Indemnity Insurance in place will also mean that you don’t need to make additional financial provision to cover such eventualities. Take out such a policy, and you’ll typically be helped with the following things:
Assistance with legal expenses
In the event that someone makes a successful claim against you, you could find yourself facing a hefty legal bill, especially if the case ends up in court. Take out Professional Indemnity Insurance, and you won’t need to worry about covering the cost of mounting your legal defence.
Assistance covering compensation
If a client makes a successful claim against you, they may be offered a cash lump sum that covers the amount they lost as a result of your professional advice; and potentially additional compensation too. If you don’t have Professional Indemnity Insurance, your work and business are at far greater risk. Have appropriate cover, and you won’t have to bear the impact of such a large financial loss.
Has your firm closed down?
Some Professional Indemnity Insurance policies provide cover even if your firm has ceased trading - some people call this “run-off insurance”, so you’re covered even if a claim pops up in the future, giving you peace of mind.
Is Professional Indemnity Insurance a legal requirement?
Although not strictly legally required, Professional Indemnity Insurance is a requirement of many professional organisations and regulatory bodies. So in effect, there are many professions that you couldn’t practice or be a part of if you didn’t have Professional Indemnity Insurance.
One such example is if you’re a solicitor working in private practice; for then you must have Professional Indemnity Insurance to meet the requirements of the Solicitors Regulation Authority. This is also the case if you’re a solicitor working in-house for your employer, but undertake work for charities, pro-bono cases or work for any other clients that are not your main employer.
However, Professional Indemnity Insurance is also a necessity for accountants, financial advisers, chartered surveyors, architects and a number of healthcare professionals, to name but a few.
When is having Professional Indemnity Insurance advisable?
Even if it is not a necessity for your line of work, it is highly advisable; and many self-employed people choose to take out Professional Indemnity Insurance. One such example would be if you’re a consultant providing the benefit of your expertise and skills to a variety of different companies or people. So if you work in IT or are a management consultant, tutor or designer, it would be advisable. Again this list is not exhaustive, merely illustrative, but it gives you the gist of how Professional Indemnity Insurance could be of assistance.
What do you need to consider?
Professional Indemnity Insurance can provide reassurance in the event that someone makes a successful claim against you as a result of your professional activities. It will protect you against a wide range of risks, but not all of them. Just like any other policy, Professional Indemnity Insurance has terms, conditions and of course, limitations.
Conditions and terms will vary from policy to policy, but the key here is that your policy must cover the time of the incident and the time of the claim. Also, be mindful of the fact that such policies don’t usually cover you for reputational damage caused by the mistake on your part. However, having Professional Indemnity Insurance would provide you with cover if you made a mistake during the course of your work in a variety of circumstances.
The broader context
When taking out a policy, you’ll need to consider how much cover you require and what financial loss you’d face if a successful claim were to be made against you. Also, when taking out a new policy like Professional Indemnity Insurance, look at it in the context of your broader insurance needs, which may also include the likes of employers’ and public liability insurance.
So for example, Professional Indemnity Insurance might cover you if someone suffered a personal injury as a result of your professional work, but not if they suffered the injury while tripping up in your business premises (that’s more likely to be covered by Public Liability Insurance). Moreover, if it was an employee who had the accident, it would be Employers’ Liability you’d require.
Your insurance needs
Although buying insurance online can work out well, you might want to talk to an experienced insurance adviser about your particular requirements. That way, you’ll get a more personal service and may find yourself offered policies not available on price comparison websites. The insurance business is responsive to the specific needs of individual people and businesses, and they can tailor policies to suit you.