Indemnity

Professional Indemnity insurance (or ‘PI’ for short) is essential insurance for any business providing professional advice or services.

It covers you for liabilities that arise from negligent advice you give or services you provide in a professional capacity to your clients, thereby causing a financial loss.

If you are an accountant, lawyer or financial adviser you must have professional indemnity insurance to trade legally. Many other businesses chose to have it, as it gives peace of mind and has many benefits.

As you have to be covered at both the time of the incident and when the claim is made, it’s not enough to think about it “one day” – you need to act now.

A typical policy will:

• Cover damages awarded by a court against you: if a client says you didn’t deliver what you said you would, or you give a client bad advice that costs them business or money, they may sue. Damages have been known to run into the millions of pounds.
• It will also cover your legal costs: Defending a claim of negligence can be expensive. Sometimes legal fees alone have caused a business to go under. Typically insurers will pay for the very best lawyers they can find
• Some insurers might even pay to help put something right: if you spot a problem before a claim is made against you, some policies will allow you to go to your insurer and get help with the cost of fixing it before a claim is made against you. Such policies might cost more, but the peace of mind might be a benefit well outweighing the cost.
• Specialist advice: many insurers will provide a free 24-hour helpline to give advice if you need it once you’re covered.
• Often providers will offer ‘bolt-on’ insurance: You might need insurance such as employer’s liability, etc. Whilst these cost more, they’re sometimes cheaper when taken with indemnity insurance than as stand-alone policies.
• Makes you look professional: Whilst In addition, having indemnity insurance in place gives confidence to your clients: it’s a mark of a business that takes its work seriously.

Each policy differs slightly though, and it’s worth discussing with the insurer or broker exactly what is covered.