Understanding Professional Indemnity Insurance, Who Needs It?

What is Professional Indemnity Insurance?

It covers the costs of a claim if you give a customer inadequate service, advice or designs.

Professional indemnity insurance protects your business if you’re found to have provided poor services, bad advice or dodgy design, which resulted in customers or others losing money.

If something goes wrong for a customer following your advice, professional indemnity insurance could help cover the costs of the legal fees, expenses, compensation and other costs incurred in your defence.

Who is Professional Indemnity Insurance for?

Anyone who provides advice or a service to customers.

Professional indemnity insurance is useful for businesses and self-employed people who provide advice or a professional service to customers. This normally includes professions like:

Designers including web designers, graphic designers and interior designers

IT professionals including IT contractors, consultants, programmers and developers

Management and business consultants including marketing, training and education consultants

Technical engineers including CAD designers, project engineers and building services engineers

So, whether you’re a contractor, freelancer, self-employed professional or run a limited company, professional indemnity insurance could help bolster your sense of security in your work.

Why does my business need Professional Indemnity Insurance?

To protect yourself when mistakes happen and to open yourself up to more business.

No matter how skilled you are, no one’s perfect. Every business can be subject to a claim if your advice or services fail to meet a customer’s expectations. And with three quarters of business owners saying they’re concerned about making mistakes, it’s clear that getting things wrong is a big worry for business owners.

So, whether your business is accused of inappropriately handling sensitive client information or facing allegations of a copyright breach, professional indemnity insurance could help provide the additional peace of mind that many business owners are searching for.

Not only that, but a professional indemnity policy could potentially help you win new business too – especially as some customers will only do business with you if you have the proper insurance in place.

When would I need Professional Indemnity Insurance?

If someone made a claim against your business it would cover the legal fees and compensation costs.

With professional indemnity insurance, your business could be protected if the worst-case scenarios become reality:

Defamation: if you’re accused of libel or slander because of something you’ve said or written.

Breach of copyright: if you unintentionally use someone’s intellectual property without permission.

Loss of documents: if your own documents or documents in your care are lost or damaged.

Dishonesty of employees: if a civil liability claim is made against your business because of fraud or dishonesty by someone working for you.

Each of these claims can prove costly and disruptive if your business is found responsible – professional indemnity could help to ease the burden.

How much Professional Indemnity Insurance cover should I consider for my business?

It depends on the type and size of your business you run.

The level of cover your business needs depends on the risks you face each day. You can tailor your insurance to exactly what you need, to insure your business against compensation payments and legal costs.