We are just humans and as humans, we tend to make mistakes. However, regardless of how small the mistake is, it can still lead to big claims. That is why it is important to have professional indemnity insurance, otherwise known as PI insurance. It can protect you in case your client suffers a financial loss due to your mistakes. There are various types of professional indemnity coverage to choose from. You need to compare quotes so you can find the best coverage that suits your needs.
What is professional indemnity insurance?
Individuals and businesses that provide services, advice, or designs must get professional indemnity insurance. It is also essential if you are handling data or intellectual property that are owned by others. Professional indemnity insurance can cover the cost of the claims and legal fees in case your service, advice or designs has caused the client to suffer from a loss or damaged his reputation.
Who needs professional indemnity insurance?
Not all professionals or businesses require professional indemnity insurance. In fact, it is not even legally required. Most often, it is only needed by professionals or businesses that provide advice, designs, skills, or other types of services which are considered as a part of their work. Self-employed individuals such as consultants and accountants may require this type of insurance.
Sometimes professional indemnity insurance is needed if a professional or business wishes to become a member of a certain organization. Some industries also require this coverage as part of their regulations. Some professionals who require professional indemnity insurance are accountants, consultants, solicitors, architects, financial advisors, medical professionals, surveyors, etc. Sometimes your client may also require you to have this coverage as part of your contract.
Not all businesses require professional indemnity insurance, however, it might be a requirement for design companies, marketing agencies, web agencies, management consultants, and others. The advice or designs offered by these organizations could either make or break a certain company.
How does a professional indemnity insurance works?
It is very important that you must be aware of your coverage period. Keep in mind that your professional indemnity insurance provider can only cover the claims filed during the period that you are insured. Hence, the time that you give the advice is not only important, it also matters when the claim is filed. If the claim is made after your coverage period, then you will not be covered by professional indemnity insurance anymore.
For instance, if you purchased annual professional indemnity insurance in January 2018 and you offer a piece of advice to a client in February 2019 which resulted in a claim, then that claim will not be covered anymore. At the same time, any other advice that you’ve provided to your clients before the policy was purchased will not be covered.
What can professional indemnity insurance covers?
Sometimes it is impossible to avoid mistakes. That is why there is professional indemnity insurance for you. In can cover the loses of the client which incurred due to your mishaps in providing advice, designs, or services. It can pay for the cost of compensation and legal fees. The compensation payments refer to the financial loss experienced by the client.
Some of the mistakes that can be covered by professional indemnity insurance are loss of data or pertinent documents, sharing confidential or sensitive information or using copyright content without asking for any permission, publishing wrong statements that could damage your client’s reputations, or making mistakes in your designs, advice, or services.
Should you purchase professional indemnity insurance?
Professional indemnity insurance is considered as a very important coverage that is required by various types of professionals and businesses such as consultants, surveyors, architects, accountants, and others. Even if you don’t intend to do something wrong, but you can never tell when mistakes can occur. Take into account that the cost of claims and legal fees can be enormous.
How much does professional indemnity insurance cost?
Most likely, the cost of a professional indemnity insurance policy will greatly depend on several factors. For instance, the type of service or work that you provide to your clients as well as the level of cover that you choose. The best way to find out is to get an online quote.
If you still have some questions, then your provider can help you get a better understanding of professional indemnity insurance.
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