When do I need professional indemnity insurance?
Is professional indemnity insurance the same as business insurance?
‘Business insurance’ is a general term that describes all sorts of insurance products. Normally, it is used to mean public liability insurance, employers’ liability insurance, and sometimes also professional indemnity insurance.
What is professional indemnity insurance?
It protects your business if you are sued by a client because they suffered financial loss after receiving professional services from your business.
Professional services can include things such as:
- advice
- designs
- specifications
- intellectual property matters.
Which businesses must be insured?
Some professions are legally obliged to have professional indemnity insurance, such as lawyers and accountants.
If your business provides any ‘professional services’ like those in the list above, professional indemnity insurance covers your business against negligence claims, regardless of how small your business may be or the way it is legally structured.
Why may I need to be insured?
If you are successfully sued by a client, the costs and damages awarded can be significant. Without cover, your business will have to pay. This can be financially devastating and could potentially put your business at risk.
Some customers may refuse to do business with you if you do not have appropriate insurance in place. Trade associations have also been known to prevent uninsured businesses from joining them. This can affect your ability to get new clients, and harm your business’ reputation.
When do I need to get it?
If you are providing professional services, you should already have professional indemnity insurance in place. If you do not have cover and need it or may be providing ‘professional services’ in the near future, you should get a policy as soon as possible.
Will it be expensive?
When calculating your premium, several factors will be considered including the size and nature of your business. Premiums can vary, but on average are competitive and affordable.
In the long run, the cost will be a small price to pay for guaranteeing the wellbeing of your business.