Exchequer Risk Management
No.3 Siskin Drive, Coventry, CV3 4FJ
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Professional Indemnity Insurance

Professional Indemnity Insurance protects your business over claims brought against you by a client.

01

Cover

Professional indemnity cover is designed to protect professionals who give advice or provide a service as part of their business.

02

Protection

PI insurance can help to put mistakes right and cover any legal costs if a client alleges you have provided inadequate service or advice.

03

Reputation

Many professional bodies require their members to have PI insurance and large industries and companies may insist that you have adequate PI cover before you can work with them.

What is Professional Indemnity insurance?

Professional Indemnity Insurance (also known as indemnity insurance or PI insurance) provides cover to protect you if claims are brought against you by a client. Moreover, it can help to put mistakes right and cover any legal costs if a client alleges you have provided inadequate service or advice.
Many professional bodies require their members to hold professional indemnity insurance and large industries and companies will more often than not, insist that you have adequate PI cover before you are able to undertake work for them.

What does Professional Indemnity Insurance cover?

Professional Indemnity Insurance is designed to protect you against the cost of dealing with a claim from a disgruntled customer. Whether that’s due to a mistake in measurements or strategic advice that ends up losing a client money, it’s important to ensure you’re covered should an error occur.
Here are some of the risks that the insurance can cover:

Negligence

Protection against negligence is at the core of a professional indemnity insurance policy. This is because no matter how careful you are, or how robust your processes are, mistakes still can and do happen. So, if you’re working for a client and an error is made, or you fail to do something, then you’re deemed to have been negligent.

Just because images are available on the internet, it doesn’t mean that you can use them. The same goes for slogans, logos or designs. In fact, intentional, or accidental, use of someone else’s intellectual property without their permission is a breach of copyright law.

If you have access to a client’s data or important documentation, then it’s your responsibility to keep them safe. If you lose them or they end up in the wrong hands, your client may seek compensation.

If a client accuses you of defaming them, they may believe that you have made a statement that could damage their reputation. Libel (anything which is spoken) and slander (anything which is written) are both forms of defamation and could result in legal action being taken.

icon Do I need Professional Indemnity (PI) Insurance?

Here are some reasons why you may need Professional Indemnity Insurance which might help make things clearer:

  •  You provide advice and consultancy - Clients can claim compensation if there’s a mistake in the advice you’ve given
  •  You provide an expert service - In case you make a mistake in designs, plans or calculations
  •  You handle people’s information - You could face claims if you accidentally disclose data or infringe on a client’s legal rights
  •  A client insists you have it - Many clients will require that you have professional indemnity insurance in place before you can start working for them
  •  Your professional body requires it - You might belong to a professional body or industry association where professional indemnity insurance is compulsory

What professions need Professional Indemnity Insurance?

Professional indemnity is designed to provide cover to professions who give advice or provide a service as part of their business. Examples of professions that normally require PI are:

  • IT consultants
  • Accountants
  • Surveyors
  • Design and construction
  • Town planning
  • Business consultants
  • Architects
  • Engineers
  • Interior designers
  • Risk management

For more information, talk to our team of Experts

How are the Professional Indemnity premiums calculated?

As with any type of insurance, the cost of your professional indemnity insurance premium is based on many different factors. Your insurer will ask questions about your business and the answers you give influence the amount you pay. These factors include:

The size of your business

Your insurer will consider your annual turnover to determine the size of your business. The equation is simple. The more money you make, the more work you do, the higher the risk of a claim; the higher the risk of a claim, the more expensive your insurance will be.

Some professions are deemed to be exposed to risk more than others which influences the price you pay. If you work in an industry where your negligence would result in significant financial consequences, you can expect to experience higher insurance premiums.

The more you need, the more it will cost – simple. If you were to have £5million Indemnity cover, it would cost you more that to have £250,000 worth of Indemnity cover. This reflects the extra exposure to risk for the insurer.

It’s likely that you’ll need more than just professional indemnity insurance to protect your business. If you come into contact with your clients, either on your premises or theirs, for example, then you may need public liability insurance. Also, if you have any employees, then you may also need employers’ liability insurance which is a legal requirement.

How much professional indemnity cover do I need?

It will be different for every business, but you should consider the needs of your regulator or professional body, your client contracts, and the risks you face when choosing your cover level.

Regulator or professional body
If you’re a member of a professional industry body, it’s worth checking if they specify a minimum level of professional indemnity insurance that you should hold
If you’ve agreed to a contract with a specific customer, client or organisation, they may insist that you have a minimum amount of insurance before you can undertake any work.

Determining the right amount of professional indemnity insurance to buy will vary so understanding what you need covered is critical for your business. Give some thought to the worst-case scenarios, not just those that are most likely to happen. If an unexpected claim occurs and you’re underinsured, it could have disastrous consequences.Determining the right amount of professional indemnity insurance to buy will vary so understanding what you need covered is critical for your business. Give some thought to the worst-case scenarios, not just those that are most likely to happen. If an unexpected claim occurs and you’re underinsured, it could have disastrous consequences.

Determining the right amount of professional indemnity insurance to buy will vary so understanding what you need covered is critical for your business. Give some thought to the worst-case scenarios, not just those that are most likely to happen. If an unexpected claim occurs and you’re underinsured, it could have disastrous consequences.

Professional Indemnity insurance FAQs

Do I need professional indemnity insurance if I work from home?

Professional indemnity insurance is not premise based so it doesn’t matter where you’re working, if you’re offering advice then you need PI.

If you work in certain professions, regulatory bodies might require that your business has professional indemnity insurance, however, it isn’t strictly a legal requirement.

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