Professional Indemnity Insurance
What is Professional Indemnity Insurance?
Let’s face it, no matter how many years’ experience or how many qualifications we have, mistakes still get made. We’re only human after all. Professional indemnity insurance, also known as PI insurance or errors and omissions insurance, can help protect you if a claim is raised due to bad advice or design work.
If a client or third party alleges that you have made a mistake and they have suffered a financial loss as a result, they can sue you. This could be a result of non-performance, breach of contract and/or professional negligence. Should this happen, your policy will pay for a specialist solicitor to defend you and, if it turns out you are culpable, your insurance policy will pick up the tab for compensation or damages you have to pay your client.
We deal with all claims for you and have a high success rate in getting claims paid. We have been particularly successful sorting claims for stolen plant machinery which continues to be on the rise.
What can Professional Indemnity Insurance Cover?
The main elements a policy can cover you for are;
- Legal costs to defend you and payment of damages and costs if you are found liable.
- Professional negligence – if you make a mistake or give bad advice.
- Defamation and libel – writing or saying the wrong thing.
- Dishonesty – by your employees or sub-contractors.
- Breach of confidence – sharing information you were not meant to.
- Loss of data – either paper or electronic.
- Infringement of intellectual property rights – i.e.: copyright or trademark.
What else do I need?
- Office or Surgery Insurance: If you work from an office or surgery environment.
- Cyber Insurance: If you hold client data (paper or electronic), use emails, have a website, or take online transactions.
- Directors Insurance: Covers the individual and their personal assets from claims made for actual or alleged wrongful acts.
- Corporate/Company Legal Liability: Covers the business from claims made for actual or alleged wrongful acts.
- Employment Practice Liability: Covers the business against employment disputes.
Why do I need Professional Indemnity Insurance?
Legally you don’t need it – but you should have it! The only mandatory element if you have staff is Employers Liability – the rest is up to you. If you’re fortunate enough to have surplus cash to cover a worst-case scenario, and the time and expertise required to sort a claim then you probably don’t need this policy!
If, like most people, you would prefer for a claim not to hit your bottom line, and you could do without the stress or time vacuum of sorting a claim, then this policy is worth every penny! We live in a blame culture where often people are quick to jump straight into legal battles. Think of a PI policy as a safety net that will be there to provide financial protection should you encounter a disgruntled client.
What is a retroactive date?
A retroactive date means that your Professional Indemnity policy provides you with protection for works carried out after that date. For instance, if the policy has a retroactive date of the 1st January 2015, you would be covered for claims made against you for work carried out after 1st January 2015. For full protection, the retroactive date is normally the date you begin trading.
What is a material fact or material information?
A material fact is anything that may influence the judgement of a prudent insurance underwriter in deciding whether to accept a risk and if so, at what premium and terms. Using the insurance principle of ‘utmost good faith’ you should disclose all material facts about your risk of which you know or should know. For example, disclosing previous insolvency as either an individual or company director.
How much Professional Indemnity Insurance do I need?
The limit of indemnity is the amount of cover provided under the professional indemnity policy. Calculating the right amount isn’t an exact science but getting it right is important. Buy too much and you may waste some money, too little and you risk under-insuring. Our advice is to assess your maximum financial exposure and to buy as much cover as you can reasonably afford. A client, or your professional association may set the minimum limit of the indemnity they require you to have. The minimum level starts at £100,000, increasing to £250,000, £500,000, £1 million and so on.
Types of businesses we can cover
If your business provides advice or a professional service then you should think about Professional Indemnity insurance. Here are some of the more common types of businesses that we provide cover for;
- Estate Agents
- Lettings Agents
- Insurance Brokers
- Health and Safety Consultants
- Financial Advisors
- Building Contractors
- Electrical Contractors
- Advertising Agencies
- Recruitment Agencies
- Facilities Management Companies
Professional Indemnity Insurance Claim Examples
A printing company undertook the design, manufacture and installation of high graphic hoarding for a property development site. However, when they installed the hoarding it was found to be of a different colour to that which the client had requested.
A claim was made for negligence / breach of contract relating to ‘damages’, financial loss from loss of advertising revenue and the cost of the hoardings. The insurer paid out the costs of the damages to the claimant.