If you work in such a way that others rely on your professional advice, you may want to get insured for this in case anything goes wrong. At TechRound, we can put you in touch with a number of brilliant policy providers. Just get in touch with us at [email protected]
If you have a business which offers out professional advice, such as a consultancy, any mistakes which are made or something does not work out as planned which can result in costly compensation claims. Even if you have not done anything directly wrong, many clients will choose to take legal action and without insurance in place, this can be very expensive to put right.
Professional Indemnity insurance can protect your business by bearing the burden of any costs associated with the legal defence fees and claims for compensation. In fact, for a lot of professionals having this kind of insurance in place is actually a requirement when working with certain clients. Many companies will not work with a business unless they have professional indemnity insurance in place.
Professional Indemnity Insurance Explained
The most common reasons for this type of insurance are as follows:
• Professional negligence: a basic mistake in a piece of work which was carried out without their knowledge or intention. An example of this could be an estate agent selling a home to a customer which turns out to be damaged without their knowledge. The client may demand compensation in order to pay for any necessary repairs.
• Loss of documents or data: the person may be reliable in holding key information, documentation or certificates and there may be a cost to replace this.
• Breach of copyright or confidentially: a person who is a professional acting on behalf of a client giving away information which is confidential to a competitor or a third party after they have agreed not to do this. This may lead to a profit loss if the competitor steals an idea and gain value from doing so.
• Defamation: the professional publically speaks badly of a company or an individual, which damages their reputation and may cause loss of business and profit.
What does Professional Indemnity insurance include?
Professional indemnity insurance will provide your business the cover you will need if the professional advice you have given to a client causes a financial loss or burden. It is very common for service providing individuals and companies to have professional indemnity insurance. Typical professions include:
Professionals will always try to give the best advice and service that they possibly can. However, mistakes can happen as we are only human, and if this is the case, your customer may want to claim compensation.
Having this insurance in place will provide financial protection for any legal costs and expenses you may face, in order to defend the claim and pay for the compensation so you can rectify your mistake. It is focused on giving you protection for the services that you provide, and if they were to go wrong at any point leading to a negative impact on your client’s business.
How do I know if I need Professional Indemnity Insurance?
As mentioned, some regulatory bodies do require individuals and businesses to have Professional Indemnity Insurance in place, especially where advice will be involved as a key part of the business practice. It will only be a requirement of the professional as some companies may request to work with contractors that have it in place already.
It could turn out to be more expensive not to have Professional Indemnity Insurance. If a customer does want to take legal action, you could be forced to fork out thousands of pounds in compensation and legal fees to resolve the claim.
What limit of Professional Indemnity Insurance do I need to take out?
Typically, Professional Indemnity insurers will offer levels of cover ranging from £50,000 up to a whopping £10 million. The amount of cover that you will personally need will be dictated by your business’s needs and the size of your business.
A great way to work out how much cover you may need is to estimate what could possibly go wrong for a client who is reliant on your advice and how much it would cost to put this right.
For example, if you work as a dentist and you charge a customer for braces as a treatment and this treatment is unsuccessful after a number of years, then you can estimate how much money it would take to correct this.