Compare quotes for professional indemnity cover
Professional indemnity (PI) insurance is business insurance that covers the cost of compensation claims and legal action if a client sues you for negligence or damages because you’ve made a mistake or been negligent in the work you’ve done for them.
Professional indemnity insurance should cover the cost of compensating the claimant. That includes loss of earnings, future loss of earnings and the cost of repairing the damage.
You should make sure your policy covers your legal costs as well and any other damages that could be awarded to the claimant.
The types of risks your business might be exposed to include:
Professional indemnity insurance is usually for businesses that offer professional services or advice. For example, accountants, architects, journalists, solicitors or financial advisers.
It’ll cover you for making mistakes that lead to compensation claims from your clients.
If you’re a solicitor who incorrectly sent confidential information to the wrong person, or a journalist who’s accused of defamation, professional indemnity insurance can cover the cost a compensation claim.
Generally, you’ll need professional indemnity cover if you:
Public liability insurance and professional indemnity insurance are both designed to cover the cost of compensation claims against you. But they each cover different types of compensation claims.
Public liability insurance usually covers compensation claims for bodily injuries to people or damage to their property.
Professional indemnity insurance covers you for making mistakes with the services you offer that have led to a client’s distress or financial loss.
Legal expenses cover is different again. It only pays your legal costs and any legal costs you’re ordered to pay. If you’re subsequently found to be liable and have to pay compensation, you would have to pay the compensation yourself.
That’s different to professional indemnity and public liability insurance where the legal costs plus compensation you’re liable for are covered.
It depends. The size and value of the contracts you take on makes a difference – you’ll want enough to cover your average contract value.
You might find your clients request particular insurance, and cover values, in their contract with you. If so, they’ll usually specify a minimum amount.
Generally, cover starts at around £50,000 but can go up to £5 million. If you’re not sure, ask a regulatory body for specific advice.
Insurers use lots of factors to calculate the cost of professional indemnity insurance including:
Here are a few questions to ask yourself when considering professional indemnity insurance:
If you answer ‘yes’ to any of these, it might be worth comparing professional indemnity insurance.
Where you work doesn’t make a difference. As long as you are providing a service for clients, it’s worth considering - whether you do that from your home or site visits.
Yes, business insurance is an allowable expense, which means you can deduct the cost of professional indemnity insurance when you’re calculating your taxable profit.
It isn’t a legal requirement, but certain regulators and professional bodies might need your business to have professional indemnity insurance as a condition of membership – accountants and architects are just a couple of the professions which need it to meet industry standards.
Check whether it’s compulsory in your profession. You might find your clients need you to have it as part of your contract too.
It’s not recommended. This is because professional indemnity insurance works on a ‘claims made’ basis, which means you need to have an active policy both when you did the work the claim relates to and when the claim was made against you.
For example, say you’re a contractor that had a project running from March to August, so you only take out professional indemnity cover for this period. The client makes a claim against you in September, but your short-term policy has lapsed, so you’re personally liable for the claim.