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<\/figure>\n<\/div>\n\n\nWe recently conducted a survey among UK small businesses and found the number operating without professional indemnity (PI) insurance is a worryingly high 40%. <\/p>\n\n\n\n
That\u2019s two out of every five small businesses not covered if a customer or client accuses them of professional negligence and decides to sue.<\/p>\n\n\n\n
12% of those without PI claim they haven\u2019t heard of it so can probably be excused. How can they be expected to buy something they don\u2019t know exists?<\/p>\n\n\n\n
28% of those without PI said it was because they didn\u2019t think they needed it. How can a business decide against such reassurance and protection?<\/p>\n\n\n\n
Well, one of the main reasons is that there\u2019s lots of confusion about the product name itself.<\/p>\n\n\n\n
<\/p>\n\n\n\n
Clear as mud<\/h2>\n\n\n\n
Of the 500+ small businesses we asked, 96% couldn\u2019t accurately define the word indemnity<\/em><\/strong>. Some tried and were a bit wrong; others tried and were really<\/em> wrong. And then there were those who didn\u2019t try at all, admitting they simply didn\u2019t know. <\/p>\n\n\n\n It\u2019s obviously not a commonly used word – we totally get that – and if a business doesn\u2019t understand that indemnity is \u2018a financial payout to cover loss or damage\u2019, it\u2019s not likely they\u2019ve got their head around what the product name means.<\/p>\n\n\n\n And that\u2019s not all that\u2019s confusing the UK\u2019s small businesses. Turns out one in ten actually think the word professional <\/em><\/strong>is misleading too. <\/p>\n\n\n\n Professional indemnity insurance<\/a> protects any<\/em> business that provides a specialist service to paying clients. Any<\/em> business. Not just \u2018professional services\u2019 like architects, engineers, doctors, and lawyers who need professional licenses. <\/p>\n\n\n\n That means photographers, hairdressers, even teachers should be looking at getting PI, but many don\u2019t think it applies to them.<\/p>\n\n\n\n <\/p>\n\n\n\n We asked our participants if they thought the US name for the same kind of protection, \u2018errors & omissions insurance\u2019 (E&O), was better. <\/p>\n\n\n\n Well, over half (57%) agreed the words errors <\/em><\/strong>and omissions<\/em><\/strong> more accurately represent the cover, presumably because that\u2019s what a business is actually covered for: if it makes a mistake, or fails to do something it\u2019s promised.<\/p>\n\n\n\n We agree. So we asked businesses about other possible names for professional indemnity insurance. Even more popular than America\u2019s E&O, the most preferred alternative name was \u2018professional liability insurance\u2019 \u2026 another US term. <\/p>\n\n\n\n \u2018Business advice & services protection insurance\u2019 was third most popular. What it lacks in brevity, it makes up for in being both descriptive and representative of how a business is covered. <\/p>\n\n\n\n Small businesses reckon that changing PI\u2019s name to a more obvious one would help clarify the cover and therefore show businesses they really do need it: <\/p>\n\n\n\n <\/p>\n\n\n\n After some encouragement from a friend, Martin, who\u2019d been working part-time as the library’s IT technician, decided to go it alone as a freelance IT consultant. <\/p>\n\n\n\n Unfortunately, Martin failed to back up one of his new clients’ databases, the entire data set was corrupted during a routine update, and as a result the client lost a huge chunk of their customer details. <\/p>\n\n\n\n As a brand-new one-man-band, Martin had vaguely heard of PI but thought it probably didn\u2019t apply to him. Now he had an expensive legal battle on his hands, as well as damage to his reputation, and no-one fighting his corner.<\/p>\n\n\n\n Had he had PI insurance, his insurer could have helped him sort out the situation and paid compensation if it came to it. Although it would’ve been a valuable lesson, it wouldn’t have been a business-crippling disaster.<\/p>\n\n\n\n <\/p>\n\n\n\n If this survey is anything to go by – and we think it is – the first step involves nothing more than a name change. But obviously that\u2019s actually a pretty tall order and something that would need to be addressed as an industry.<\/p>\n\n\n\n Maybe, then, the answer lies in plain speaking and using simple, understandable, everyday words. Our research shows there’s certainly a need for it.<\/p>\n\n\n\n And why should we have a say? Because we\u2019re a broker. It\u2019s our job to be the middleman between sometimes long-winded, jargon-filled insurance policies and the people who need them: sole traders, freelancers, and small businesses. Unfortunately, this issue is bigger than just one company. If the insurance industry as a whole was to respond to this call for clarity, then the UK\u2019s small business community might just be better insured.<\/p>\n\n\n\n See the survey results for yourself. And feel free to share far and wide.<\/p>\n\n\n\n Embed this infographic by copying and pasting this code:<\/strong><\/p>\n\n\n\nMake insurance great again<\/h2>\n\n\n\n
The IT guy without PI<\/h2>\n\n\n\n
How to fix professional indemnity insurance<\/h2>\n\n\n\n
We’re doing what we can<\/a>. <\/p>\n\n\n\n![\"Small](\"https:\/\/www.policybee.co.uk\/blog\/wp-content\/uploads\/2019\/06\/PI-June-2019-FINAL-3.jpg\")
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