What is Professional Indemnity Insurance?

Professional Indemnity Insurance (sometimes called PI insurance for short), provides cover to pay for legal costs and expenses if a customer claims you have made a mistake or given incorrect advice that leads to a loss or damage to their business. It also covers any compensation you have to pay if the claim is upheld, as well as any costs involved in correcting your mistake.

What does Professional Indemnity Insurance cover?

No matter how experienced you are, or how well you and your team know your business, mistakes can happen. That is a simple fact of life. Stanmore Professional Indemnity Insurance protects you against those mistakes by providing cover in the event of:

Professional negligence

Errors and omissions that directly impact on a customer’s business. For example, a software company may develop a bespoke online security system for a client, which later proves faulty. The company could then have to pay compensation to the customer for loss of business and cover the cost of correcting the fault.

Loss of money or goods

Many businesses look after money or store products and raw materials on behalf of their customers. So if a solicitor misplaces important documents  or a courier loses an item in transit, they may find themselves facing a compensation claim in court.

Loss of documents or data

Increasingly common in the digital age, data breaches and thefts are leading to more and more cases of companies having to pay out to compensate for the loss of trade secrets and other kinds of intellectual property.

Breach of copyright and/or confidentiality

Using someone else’s intellectual property without permission, whether it is an image, a piece of music or a simple logo, can lead to a lawsuit and a large compensation payment. Professional Indemnity Insurance will help you cover the cost of a claim if you accidentally infringe copyright law.

Defamation (Libel and Slander)

A defamation claim is brought when someone believes a business has said something (slander) or written something (libel) that damages their reputation. Whether or not the defamation is deliberate, it can still lead to a large compensation claim and unwelcome negative publicity.

Insurance types

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Business Cyber Insurance Cover

Protect your business in the event of cyber attack

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Employers Liability Insurance

Provides you with cover against claims from employees

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Property Damage Insurance Cover

Make sure your business can continue if the worst happens

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Public Liability Insurance Cover

Cover all kinds of claims made in a wide variety of work environments

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Commercial Financial Crime Insurance Cover

Protect your company against direct losses that could occur due to the theft of money

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Directors & Officers Insurance Cover

Liability cover that protects a company’s directors, senior management and other key personnel

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Business Interruption Insurance Cover

Insures you against losses of income that could occur if you were unable to trade due to an unexpected event

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Who needs Professional Indemnity Insurance?

Whatever industry you are in, having a Professional Indemnity Insurance policy that covers you against legal costs and compensation offers enormous peace of mind. It also allows you to concentrate on your core task of planning, running and growing your business while a case is heard. In some cases, it could even stop your business going into liquidation in the face of a claim it couldn’t otherwise possibly meet.

The types of business that have traditionally needed PI Insurance include Professional Consultants, Technology Service Providers, Solicitors, Design Engineers, Recruitment Professionals and Private Tutors.

As the knowledge economy continues to grow, however, the emergence of independent businesses offering critical skills and advice in highly specialist markets has made Professional Indemnity Cover even more of a priority.

In short, Professional Indemnity Cover can help reduce risk and exposure, while providing all-important financial stability for businesses that provide a service of almost every kind.

How much Professional Indemnity Insurance Cover do I need?

PI Insurance is often arranged on a contract by contract basis, especially where larger, long-term projects are involved. In these cases, there is often a minimum specified amount that the client requires a supplier to be covered for in the contract.

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If you operate in an industry where professional liability cover is a legal requirement, there will usually be a minimum level of cover set out by the regulator or professional body that you can use to gauge your ongoing PI Insurance needs.

In either case, our team will work with you to arrive at a level of cover based on a comprehensive assessment of the likely risk and the value of any losses resulting from negligence on your part.

Is Professional Indemnity Insurance mandatory?

Many professions, such as engineering, accountancy and surveying, make PI Insurance a compulsory requirement for businesses before they’re allowed to practice.

Individuals working on a freelance or contract basis may not need cover as a legal requirement, but could find they struggle to be awarded contracts without it.

Even if you do not have to have PI Insurance to carry out your business, doing without it still exposes you to the risk of having to pay thousands of pounds in compensation and legal fees to defend a claim.

So rather than “Do I need Professional Indemnity Insurance?”, perhaps the question should really be “Can I afford to do without it?”

Talk to Stanmore the insurance people about Professional Indemnity Insurance Cover now – call our team on 01204 570 370