Professional Indemnity Insurance

What is professional indemnity insurance?

Professional indemnity insurance, often also referred to as PII, is a type of business insurance that covers you in the event that someone makes a claim against your business or sues you and your company for negligence or damages as a result of neglect or a mistake that you’ve made in your workplace or in the work you’ve done for the client.

It covers the cost of legal action and compensation claims if a client sues you, so you don’t have to worry about paying for legal fees and compensation costs out of your own pocket. It works in a very similar way to public liability and employers’ liability insurance.

What does professional indemnity insurance cover?

Professional indemnity insurance covers many different things, but of course, the level of cover that you receive depends on the type of policy you take out and how much you’re willing to pay for the highest level of cover so that you’re protected in almost every eventuality.

This type of business insurance covers the cost of any compensation owed to the client who has made a monetary claim against you and your business. This can include things like loss of earnings, including any potential future losses and the cost of repairing the damage that occurred in the first place. It’s also important to ensure that you take out a policy that covers your legal costs in the event that you’re taken to court by a client and you need to pay for legal fees such as a lawyer and court appearances.

There are several risks and reasons why a client might make a claim against your business, including:

• Professional negligence - this is when someone decides to sue your business claiming that you gave them incorrect advice or made a mistake with what you were advising.
• Breach of copyright - this occurs if you infringe on copyrights, trademarks or intellectual property of the client and they decide to take legal action against your company.
• Lost or damaged documents - while this isn’t quite as common as some of the other risks, you may be sued for loss or damaged documents if they went missing or were damaged while in your possession.
• Defamation - a client may make a claim against your company if they believe that you’re guilty of producing, supporting or encouraging false statements about them.
• Confidentiality breaches - similarly to breach of copyright, breaches of confidentiality is another thing that you may be sued for if you’re found to have shared sensitive and private information about your client without their permission.

Do I need professional indemnity insurance?

Professional indemnity insurance isn’t a legal requirement across the board for all types of businesses, but it is strongly advised and encouraged for some businesses and it is even required by law by some professional bodies in order to ensure that your business is complying with industry standards.

Professions such as architects, accountants, journalists, solicitors and financial advisers usually all require professional indemnity insurance to some degree as these are all types of businesses who could be seriously affected by compensation claims, especially when it comes to things like confidentiality breaches or defamation.

If you operate a business where you handle sensitive client information or you provide expert skills or advice, you might want to consider taking out professional indemnity insurance.

What is the difference between public liability and professional indemnity insurance?

Public liability insurance and professional indemnity insurance both work in very similar ways in that they both cover compensation claims in the event that a claim is made against your business or someone decides to sue you.

Public liability insurance usually involves cover for compensation claims that arise as a result of injury, illness or even death to a member of the public or damage caused to their property.

Professional indemnity insurance on the other hand, offers cover for compensation claims in the event that you make a mistake or are found to be guilty of negligence with the services or advice that you offer clients.

How much is professional indemnity insurance?

The cost of professional indemnity insurance is based on multiple factors, including the type of business you have (whether you operate as a sole trader, freelancer or limited company), how big your business is and the number of employees you have, how much money your business has made in the last year and whether you’ve made any claims in the past.

The cost of your policy will also be determined by how much cover you want and the level of cover you need to ensure that you’ll be protected in the event that you need to claim on your policy.

To find out how much professional indemnity insurance would cost for your business, get in touch today and our helpful agents will compare quotes from our panel of providers for you.