There are many reasons for choosing to buy cover, whether that be to meet contractual obligations or to comply with regulatory requirements. Your business may require it if;

• It involves giving advice to clients
• You provide a professional service
• You handle information that is confidential in nature
• You use material that is subject to copyright or intellectual property belonging to others
• You belong to a professional body and their rules stipulate that professional indemnity insurance is compulsory
• A client insists your business arranges cover before they offer you work (a contractual requirement to have the cover)

Your business could face a claim if you provide negligent or inaccurate advice and as a result of that advice your client suffers a financial loss. Equally, if you infringe somebody’s intellectual property rights (copyright infringement for example) they may claim for losses against you.

Many businesses insist that their business partners or suppliers have professional indemnity insurance so that they are not reliant upon the supplier having sufficient funds themselves to meet such claims.

There are many benefits to purchasing a policy. Offset the financial risk to your insurer, ensure your business doesn’t have to fund claims and receive professional legal support when things go wrong.

• Protect your business against costly negligence claims – the policy will pay for any compensation that you need to pay (up to the level of cover you choose)
• Pay for legal costs to defend you even if the claim isn’t valid
• Provide you with expert advice and representation to minimise disruption to your business
• Show your clients that you take your professional reputation seriously
• Comply with contractual obligations
• Meet regulatory or trade body requirements

PI insurance offsets the risk of claims to your insurer, meaning that your business doesn’t have to pay for costly legal defence costs nor find the money to meet any settlements or claims payments. Many businesses would simply not be able to meet the costs of an expert legal defence, never mind the claims payment. Costs can run into the tens of thousands of pounds and more, so a policy to cover this makes perfect business sense.

As well as meeting contractual or regulatory requirements (Accountants, Architects and Solicitors for example are all required by their governing body to hold PI insurance) arranging professional indemnity insurance demonstrates to your clients that you take your reputation seriously and that your clients interests are protected by the policy.

Professional indemnity policies will provide a wide range of cover to protect against the following typical scenarios:

• Negligence/mistakes/errors and omissions If the advice you provide to a client is negligent or you simply forget to do something or make an error, your client could suffer a loss that they try to claim back from you.
• Dishonesty of Employees Dishonesty of employees could lead to a loss for your business. PI policies will often provide cover for these potentially costly losses.
• Infringement of intellectual property rights As an example, if you breach copyright the copyright owner could sue for damages.
• Loss of documents and data Lose documents or data that causes your client a financial loss could lead to a claim.
• Libel and slander Libellous or slanderous acts can lead to very expensive legal proceedings and substantial claims for damages. PI policies usually provide cover for this which can protect you from these costs.
• Unintentional breach of confidentiality Mistakes happen, and a breach of confidentiality can easily occur regardless of strict business processes.

We’ve put together information to help explain professional indemnity insurance in simple terms. Our FAQ will assist with answers to most of the common questions that we are asked, but please do let us know if you have any other queries and we’ll happily assist.

We’ve also compiled more detailed information for certain professional occupations;

• Accountants
• Architects
• Consulting Engineers
• Design & Construction
• Expert Witnesses
• IT Consultants
• Website Designers
• Management Consultants
• Estate Agents
• Letting Agents
• Property Management & Surveyors
• Environmental Consultants
• Recruitment Consultants
• Private Investigators
• Photographers

If you need more information, please contact us.