Phone icon
Menu icon
Professional insurance
with a personal touch
We're here to help
0345 222 5391
Mon-Fri, 9am-5.30pm, local rate & mobile friendly

Quick professional indemnity insurance guide

23/02/2019

This quick professional indemnity insurance guide will answer all your PI questions in record time

Buying professional indemnity insurance is no different to buying most things.

You don’t want to waste your money on something that doesn’t, or won’t, do the job. But you don’t want to pay through the nose for things you don’t need either.

So you need to get it right and that means doing your homework. But let’s be honest: researching insurance is tedious. If only there was some kind of quick professional indemnity insurance guide to get you started.

Welcome to your lucky day.

What is professional indemnity insurance?

Professional indemnity insurance (PI for short) is for businesses or individuals who offer a specialist service, give professional advice or provide particular expertise to paying clients.

It protects you against claims made by dissatisfied or disgruntled clients, and clients alleging you’ve not done your job properly.

Why do I need it?

If a client does think you’ve made a mistake and sues you for their financial loss, you’ll need to defend yourself. Even if you know the claim isn’t valid, you’ll still need to do something about it.

Our own research tells us that if things do go wrong, in the absence of anything else, most businesses turn to their solicitor for help. That means big bills. And even bigger bills on top if, in the end, a court rules against you.

Having PI insurance means you don’t need to worry about that. The insurer appoints their own expert legal team, pays for your defence and stumps up for the compensation or awards to your client.

You get protection for your finances, minimal disruption to your business and the might of an expert insurer fighting your corner. Not bad for couple of hundred quid a year.

What does it cover?

We’ve already mentioned your professional negligence (actual or alleged). That’s the big one, but it's certainly not all.

You may not know that a good PI policy can also cover (depending on the wording) claims arising from these:

  • Defamation
  • Infringement of intellectual property
  • Loss of documents or data
  • Negligent misstatement or misrepresentation
  • The dishonesty of your employees
  • Computer virus transmission
  • Breach of confidentiality.

And, really good policies will also pay for the cost of fixing a mistake before your client is aware of it (assuming not fixing it will lead to a claim of higher value, of course).

Anything else?

Yes – get help. This is only a quick, at-a-glance professional indemnity insurance guide after all.

If you’re in the market for PI cover for your particular business or line of work, it’s worth talking to a specialist broker first. Understanding the basics of the cover is easy enough but policy wordings are laden with unhelpful and confusing insurance terms like ‘in the aggregate’, ‘claims made’ and ‘retroactive cover’. Get someone to explain what they mean.

And get the right policy wording too. There’s no point having a cheap, ‘general’ policy if it doesn't cover the risks your business faces. Again, an expert can explain what you need and take care of finding the right policy to cover it.

You'll find the cost of getting it right is much lower than the cost of getting it wrong.

You can speak to one of our specialist advisers about the right professional indemnity insurance by phoning 0345 222 5391. Or click here.

Image used under license from Shutterstock.

If you liked this, you might like thesethis...

Does your business insurance have hidden benefits?
Not all surprises are nice. But surprise business insurance benefits hidden within your policy documents aren't to be sniffed at. Here's what to look for:
What is run-off cover?
Run-off cover is a bolt-on to your professional indemnity. Here's how it works and why you need it to protect your past work even after you stop trading.
How much does professional indemnity insurance cost?
One of the most common questions we’re asked is: How much does professional indemnity insurance cost? Here's why there's not (always) a simple answer.

More Advice, News & Know-how

Sign up to being prepared and protected

Get reliable advice on protecting and fine-tuning your business or charity sent straight to your inbox. Plus, receive other occasional bits we think you'll enjoy, like competitions and offers. We promise not to swamp you, and you can unsubscribe easily.

Sign me up