What is professional Indemnity insurance?


Professional indemnity insurance means peace of mind for you and your clients. It covers you for things if they do not go exactly as they should do. Whatever business you are in. You work hard to provide the best service you can. This is what clients expect. Do not let an unexpected error trip up or define your business. Make sure you have the right cover in place to keep yourself moving.

What is professional indemnity insurance?

Professional indemnity insurance is there to protect your business. If one of your clients alleges that there have been faults within your work. Nobody expects mistakes to happen, but they still do. They can also cost your clients a large amount of money. Professional Indemnity Insurance is known as PI insurance. It can cover you against negligence. Breach of confidential information or data. Poor advice which results in a financial loss for your client. It is an important insurance policy to have.

When things go wrong. Whether it is your fault or not it may be down to someone else in your business. Professional indemnity insurance can cover you up to £10M for compensation costs and legal expenses. So, you can keep running your business whilst the claim goes on.

Do I need professional indemnity insurance?

If your business provides some form of service and advice as well as handles sensitive data. It is your responsibility for you to let your property on behalf of yourself or your individuals. You must consider whether professional indemnity insurance is needed. This will cover compensation of legal costs. It would cover you should a client take you to court. It would cover your mistakes or negligence in any work.

You will have some professional bodies and regulators note that it is a legal Rule for members to hold professional indemnity insurance. Examples of these types of professions are people such as accountants. Solicitors. Surveyors. Health care professionals. Engineers. Estate agents.

Is professional indemnity insurance mandatory in my business?

Does your professional body require you to have PI insurance to become a member? Some clients may not even deal with you if you do not hold a PI insurance certificate.

You may need Professional Indemnity insurance if you: –

  • Provide expert, skills, or advice to clients.
  • Have access to client’s confidential information.
  • Produce materials that could infringe intellectual property rights.
  • Provide a professional service and can be challenged on your work.

Any type of cover can be tailored to your business. We can deal with any sector as it is needed. It is crucial that you choose the right Cover. Business insurance policy should be tailored to your business. They can relate to the sector you work in. You will find that professional indemnity insurance is catered for the individual business. Rather than the person themselves.

How much professional indemnity insurance cover do I need?

The amount of PI cover has different factors in it. It depends on whether the nature of the work and the size of your clients. To work out how much PI cover that your business needs think about what your biggest contract would be and how much you would need. Therefore, a minimum amount of coverage may also be required by your Governing body and you should talk to them.

What would be the most cost to rectify? Would it include legal fees? Could it include any client’s losses?  This will then give you some form of a guidance to find out what is needed to cover.

How much does professional indemnity insurance cost?

The cost of professional indemnity insurance does depend on the factors of your actual business. The amount that your business needs. It deals with the nature of the work that you do. Quotes can start from as little as £100.00. However, it can cost hundreds of thousands. This depends on what cover you need. Tailoring to a wide range of professionals. It is there to protect the most common of risks in your business that you could face.

Is indemnity insurance tax deductible?

Yes, professional indemnity insurance is tax-deductible.

It is also known as business insurance and is considered an allowable expense. They consider it is an essential cost. Additionally, it keeps your business running smoothly which you do not pay tax on.

What type of cover do they provide?

There are different types of cover for different types of professions. So, whilst the list below is not an exhaustive one it gives you a sign of what these types of policies cover.

Civil liability

For instance, you will be indemnified against any claim made against you from the following: –

  1. Firstly, a negligent act, error, or omission
  2. Secondly, a negligent statement or misrepresentation
  3. Thirdly, dishonest or fraudulent act or admission by an employee
  4. Liable, slander or defamation
  5. Breach or misuse of confidentiality or any right of privacy
  6. Infringement of intellectual property rights including any act of passing off.
  7. A decision by an adjudicator appointed to resolve a dispute under the schemes of construction contracts.
  8. An award by an arbitrator or tribunal of arbitrators and various other areas
  9. Lastly, any other civil liability

Defence Costs

The insurers will normally pay defence costs in defending any such case.

Asbestos costs

The insurer will indemnify against any claim arising from a negligent act or omission carrying out any professional. This specifically relates to a business that involves asbestos. Similarly, this could be from a claim arising out of actual fear. It could come from a professional survey.

Disputed fees cover.

If a client refuses to pay for work undertaken, then you would be covered. To legally be able to take them to court and dispute this including any subcontractor. Therefore, there is a maximum liability for this normally on any one policy.

Awards by ombudsman

This would normally insure you and indemnify you for any amount payable from an award. Against any reasonably necessary costs or steps insured is directed by the ombudsman

Loss of documents

This covers you for a period of any loss of documents. It also insures against any reasonable opinion replacing or restoring them. These can normally be in electronic format or paper. Additionally, it could involve any impact or virus on your software. Any unauthorised access to your system.

Statutory liabilities cover.

It would normally cover you for any statutory liabilities in relation to your profession. These are very much individual to the business.

Investigation costs

Covering up to a certain percentage of any investigation. It can deal with the conduct from an investigation. Any prosecution for an investigation.

Joint venture cover

This covers you for any claim against a joint venture partner. However, it would be relative to the profession.

Court attendance costs

This would normally cover you up to a certain amount daily to attendance in a court or for an employee that had to attend court. Therefore, there would normally be some sort of limit.

Pollution costs

There is normally some form of small cover for pollution costs but again depending on the profession.

There will always be exclusions to any policy, and these will often relate to the actual act itself. If for instance, you were insolvent it would not cover you and any infringement of any patent would not cover you.

You will also have from your insurance company details of any policy conditions which you should read through. It is so important that you understand what you must do. What you can and cannot do with respect to your business.

We can provide you with a policy that will be relative to the business that you have and what cover you need.

We can do the following: –

  1. Firstly, have flexible PI policies.
  2. Secondly, cover you up to a certain amount of legal costs and compensation as required.
  3. Thirdly, cover you for your specialist knowledge within your industry.

When dealing with professional indemnity insurance. You must understand there is a lot of information required. This is always the case when you first take out a policy. We try our best to ensure that you have as little to deal with as is possible. Unfortunately, with the type of cover it relates to there can be many questions. Normally around negligence etc these are the ones you will need to respond to.

You will find that most insurance companies will keep the previous application forms. They may have carried out over the years which could help you with filling these out. We are more than happy to go through them with you on an individual basis. We will talk you through exactly how to fill these out. It is most important that you ensure whatever you complete on the proposal form is accurate. It must not be guessed as these are extremely important documents. If the information is incorrect then the policy will not cover what you need.

Finally, please do not hesitate to contact us with your requirements.


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