Professional Indemnity Insurance – How it works
In today’s fast-paced business world, even the most respectable companies can find themselves in dispute with a client over a mistake.
Put simply, comprehensive Professional Indemnity Insurance (PI) is designed to protect your business from financially devastating and often reputation-damaging claims made by dissatisfied clients.
Your clients can claim compensation from you for any losses and expenses incurred as a result of your negligence, a mistake made by you or incorrect information provided by you.
Professional indemnity insurance covers you for costs that may arise from the client taking legal action against you, and covers your legal costs even in the event that you lose the case.
What’s covered by PI Insurance?
A PI Insurance policy will protect you and your business against claims for "Business Injury", which means any financial loss that claimants suffer as a result of:
- Any negligent act, error or omission deemed a ‘breach of duty of care’.
- Implied Statutory Terms (e.g. Sale of Goods Act 1979, Sale of Goods and Services Act 1982 and other similar legislation as well as Common Law).
- Unintentional Infringement of Intellectual Property Rights - copyrights, trademarks, broadcasting rights, any act of passing off.
- Loss of documents/data entrusted to the insured - damaged, lost or stolen data and documents belonging to your clients.
- Unintentional libel, slander, defamation.
- Unintentional breach of confidence, confidential duty or misuse of information.
- Dishonesty - liability arising from the theft of your client's money.
How will it protect your business?
Professional indemnity insurance protects both your financial security and your reputation:
- It will cover you if you make a mistake in the professional services you have provided that leads to a dispute with a client. If the dispute goes to court, you will be represented by a legal team. Even if you lose, the policy will still cover you for any damages you then become liable for, subject to the level of cover your business is insured for.
- A comprehensive policy will also cover the cost of fixing any mistake on your part, potentially avoiding a larger claim being made. Fixing a problem before it escalates is simple common sense. Avoiding lengthy court battles is a key objective.
- You are also protected in the event that one of your employees is involved in the theft of a client's money.
How much cover do you need?
There is no one-size-fits-all approach to PI policies. The level of cover you require will obviously depend on the size and nature of your business and the volume of services you provide.
Reputable UK insurance companies will tailor policies to your exact requirements, provide advice regarding your level of risk and the amount of cover you can reasonably afford.
