What you need to know about Professional Indemnity Insurance
As a business owner you no doubt will have heard or been recommended to arrange professional indemnity insurance. Many businesses are often unsure about what it means and the protection it provides so we have put together this easy to follow guide to help you understand what it is, how it covers your business and how to go about arranging it.
What is Professional Indemnity insurance?
In a nutshell, it protects your business from financial and in some cases reputation damaging claims brought by unhappy customers. The reality of today’s world is even the most highly reputed companies will have claims made against them over the slightest error because people are more inclined to do something about an issue especially if there is compensation involved. Below are the main areas where such claims could be made against your business:
- Negligence – this is often referred to breach of duty or care
- Intellectual Property – this covers infringements on others’ copyrights, trademarks and other rights
- Loss Of Documents or Data – where client items are lost, damaged or stolen
How will Professional Indemnity insurance cover your business?
- Cover against an error you make in the professional service provided to your client. Most reputable insurers will defend you should the dispute become complicated or even turn nasty. Should you lose the claim your policy will safeguard you against any further damages you become liable for. You should bear in mind the level of cover will depend on the type of business you are in.
- Covers for the cost of rectifying the mistake you have made – This will help you avoid any further expense by preventing the problem from getting worse. Nobody wants a long and drawn-out battle so most reputable insurers will help resolve the issue as quickly as possible to prevent unnecessary aggravation or added expense.
- Cover if you lose or damage a client’s documents whilst in your care.
Other benefits provided by a reliable Professional Indemnity Insurance policy include direct access to specialist advisors and legal teams should you need to be defended in court. You will also avoid paying legal expenses which could be onerous.
What level of cover should be arranged?
Each business is unique so the level of cover will be tailored to suit your insurance needs. It is advisable to purchase as much cover as you can afford in order to minimize risk. Depending on the type of business you are in there may be a minimum indemnity figure required. For instance, if you have been contracted to work for the government they require you to have at least £5million worth of cover.
If you require any further assistance or guidance please get in touch on 0207 731 3700. Alternatively, just email us your requirements.