When Would I Need Professional Indemnity Insurance
Professional indemnity insurance provides cover if you are alleged to have provided inadequate advice, services or designs to a client. Regardless of how many years experience you may have, there is always the possibility you or one of your team could make a mistake. Professional indemnity insurance covers against a wide range of potential scenarios such as:
- Defamation and libel
- Loss of any documents or data
- Unintentional breach of copyright and/or confidentiality
- Loss of goods or money
- Professional negligence (i.e. making a mistake in a piece of work for a client)
Is professional indemnity insurance mandatory?
In respect of industry bodies’ regulatory requirements, many business sectors require PI insurance. These include accountancy, engineering and surveying to name but a few. Professionals working on a contract basis – such as management consultants, business consultants and IT contractors – will almost certainly need professional indemnity insurance if they want to be awarded a contract.
However, even if you are not legally obliged to have PI insurance, without it you could be faced with huge bills in compensation and legal fees to defend a claim. This would be in addition to the opportunity cost of time spent defending the allegations.
No matter how large or small a business, or if you’re a freelancer, without PI cover your financial position could be left vulnerable if a claim is brought against you. No matter how sure you are that you will to provide the best service possible, everyone makes mistakes. Knowing that adequate insurance is in place should anything ever go wrong will give you peace of mind.
Do I need Professional Indemnity Insurance?
If you provide advice, designs or a service to your clients, you should seriously consider getting some professional indemnity cover. While most professionals enjoy good relationships with their clients, a mistake in a project can change working dynamics overnight. The chances are that if a client suffers a significant financial loss as a result of your negligence, they are likely to seek recompense. Professions that may need PI cover include consultants, IT professionals, teachers and private tutors, recruitment professionals, designers, fitness professionals and dance teachers.