Professional Indemnity Insurance
Protection for your business if you make a mistake or give bad advice
What Does Professional Indemnity Insurance Cover?
Professional Indemnity insurance protects businesses in the event that a client or other third party alleges you’ve made a mistake, given bad advice or there’s something wrong with your designs.
If a claim is made against your business, Professional Indemnity insurance will pay the cost of your legal defence and also any compensation awarded to the claimant if the court rules in their favour.
Someone can make a claim against you even if you gave your advice or services for free.
Do I Need Professional Indemnity Insurance?
Professional Indemnity insurance is mandatory for some professions. If you’re an architect, solicitor, doctor or healthcare professional, accountant, chartered surveyor or engineer, PI insurance is a regulatory requirement.
Many other professions are contractually obliged to have Professional Indemnity insurance in place before starting work with a client. This is likely to be the case for IT consultants, management and business consultants, designers and marketing professionals.
If you are a professional offering a design service, you give advice or clients rely on your expertise, it’s recommended that you cover your work with PI insurance.
How Much Professional Indemnity Insurance Do I Need?
If you are legally obliged to be covered by PI insurance your regulatory body probably stipulates how much PI insurance you need. If you’re not sure, you can check their website or get in touch with them to find out.
Equally, many clients will set out the level of PI insurance required in their contract before they start working with you.
If the amount of PI cover has not been set out for you either by a professional body or a client it can be difficult to work out how much insurance you need. This is where we can help. We will work with you to understand your business and make sure that the right level of cover is put in place.
Please call Tom Cowap or the team on 020 8290 9080 to talk through your Professional Indemnity insurance needs. Alternatively, you can email us at email@example.com
“I have used Anthony Jones for a couple of years now and have always found them to be extremely professional.
They take the hard work out of finding a new policy and always have the best interest of the customer at the heart of everything they do.”
Some of our most asked questions, answered below:
I am a start-up business, what insurance do I need?
There is a balance between adequate and appropriate protection of the business whilst keeping initial costs to a minimum. Evaluate your business risks and the need for insurance under these 4 headings:
- Assets (both physical and intellectual);
- Revenue streams;
- Liabilities to Third Parties (including contractual obligations);
- People (your staff including their importance to the business).
Usually, a package type policy covering your physical property, annual revenues, Employer’s liability and Public/Product’s liability is required. The only insurances required by law are Employer’s Liability, Motor Liability (if you have cars/vans etc) and Engineering Inspection of lifting and pressure plant if you have them.
What is business insurance?
Business insurance is a type of insurance that provides cover for businesses against financial losses due to unexpected disruption to business such as property damage, liability claims, a cybercrime issue, an issue with a director's duties, a professional indemnity or a motor accident – amongst others!
Do I need business insurance?
If you own a business, it is highly recommended that you have business insurance to protect your assets. The only insurances required by law are Employer’s Liability, Motor Liability (if you have cars/vans etc) and Engineering Inspection of lifting and pressure plant if you have them. Increasingly, suppliers or customers will ask for evidence of insurance.
How much does business insurance cost?
The cost of business insurance varies depending on the type of cover you need, the size of your business, and the level of risk associated with your industry. Insurance brokers help with this presentation to insurers in seeking the most appropriate market and price.
How much Professional Indemnity insurance do I need?
If you work in one of the professions for whom Professional Indemnity insurance is a legal requirement, the amount of cover you need may be mandated by your regulatory body. You should check on their website to find out.
Your clients may also specify within their contract the amount of PI cover they require you to have in place to protect the work you do for them.
If the amount of cover you need is not pre-determined, you can work it out by thinking about the size of projects you work on and your potential exposure to risk. We can help you calculate what this might be. Our recommendation would be to buy as much cover as you can afford.
Do I need Professional Indemnity insurance?
If your business provides advice, professional services or creates designs, it makes sense to have Professional Indemnity insurance to protect you in case anything goes wrong.
For some professions it’s a legal requirement to have Professional Indemnity insurance in place. Professions for whom it is mandatory include:
- Solicitors and barristers
- Financial advisers
- Some healthcare professionals, such as doctors, vets, dentists and surgeons
- Chartered surveyors
What is Professional Indemnity insurance?
PI insurance protects your business if a client claims the advice, service or designs you provided were faulty in some way. It will cover the cost of any claim for compensation.
What is Directors & Officers insurance?
Also called D&O insurance, this covers the cost of any compensation claims your business needs to pay if a director or key manager is alleged to have done something wrong during the course of their work. This might include negligence, breach of trust, making a mistake or failing to do a task.
Do the Government tax premiums?
Yes, they do. The current rate is 12% and is a charge collected by insurers on behalf of the Government. This tax has nothing to do with insurance brokers or insurers.
How do you earn your money?
Insurance brokers earn money in the form of commissions when business is placed with insurers. You have every right to ask a broker what commission they are earning from insurers. An alternative to commission is to quote premiums “net” and brokers agree a fee with customers for services.
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