Businesses that offer advice, professional services, or handle client data and intellectual property will most likely need/want to have professional indemnity insurance.
Professional indemnity insurance covers you if a client claims compensation for any mistake in the advice you have given them; any errors in designs, plans or calculations; any accidental disclosure of sensitive data or any infringements on a client’s legal rights. Some clients will only work with businesses with professional indemnity insurance. Some professional bodies and industry associations also make it compulsory.
What Is Covered Under Professional Indemnity Insurance?
Your business compensation payments and legal fees will be covered in the event of a client claiming against you. Any monetary loss your client suffers will be covered through the compensation payment.
Mistakes can occur in many areas, from measurements to strategic advice; anything that can cause a client to lose money which you have been responsible for, could lead to the client claiming against you. Clients can make claims of:
- Negligence – Should one of your employees lose or misplace any important documents that enclose secure information, they can put the client in danger of losing money.
- Infringement of intellectual property rights – Not having the appropriate rights and licensing for copyrighted images and photos can allow the copyright holder to sue for damages.
- Breach of confidence – The sharing of confidential and commercially sensitive information without prior consent from the owner.
As well as:
- Libel, Slander or Defamation
- Employee Dishonesty
- Accidental transmission of a computer virus
What Happens Without Professional Indemnity Insurance?
Suppose a third party should make a claim against you and you don’t have professional indemnity insurance. In that case, you may end up having to pay hefty amounts in damages as well as face the reputational repercussions, all of which can not just put your business in trouble but could cost you your business altogether.
Claims can reach hundreds of thousands, if not millions, so you must have a policy that will cover these costs to save your company should a mistake be made.
How Much Professional Indemnity Insurance Do You Need?
Cover levels can range from £50,000 and upward of £2 million. The average cover provided by insurance providers to businesses and professionals is £50,000. The cover itself can be bought as a standalone cover or included as part of a business insurance policy encompassing other areas.
Each business’s price for indemnity insurance will be determined by the type of work they do, whether or not they have made a claim before, and the level of cover they chose. The easiest way to find the right deal for your business is to compare professional indemnity insurance through Quote Goat. We make it easy to compare quotes from several leading insurance providers in one place.
