What is professional indemnity insurance?
Professional indemnity insurance, PI insurance, professional liability insurance, errors and omissions. Whatever you call it, it covers professional people or businesses providing a specialist service – design, advice, words, numbers, ideas or other expertise – to paying clients.
It protects you if one of those paying clients (or a third party) alleges you've made a mistake and it's cost them money. And they sue you for their losses.
Your policy pays for a specialist solicitor to defend you and, if it turns out you're culpable, picks up the tab for compensation or damages you have to pay your client.
This is an easy one.
It comes down to three things: money, time and legal expertise. You might have one or two but you'll need lots of all three if a claim drops through your letterbox.
Because any allegation against you, regardless of whether you're actually at fault or not, has to be defended. Ignoring it won't make it go away and, honestly, can you say you're fully equipped to fight the good fight? If you're not, can you risk damaging your business and your reputation trying?
Professional indemnity insurance is your secret weapon. Having it means you can concentrate on your work and not worry about the consequences of your clients' finger-pointing.
You get the might of an expert insurer nestling in your back pocket, ready to fight your corner and protect your finances.
You're free to run your business, safe in the knowledge you’ll still have one when it's all over.
If you have a piece of string, now's a good time to measure it.
Actually, it's not quite as haphazard as that. But getting the right level of cover isn't always an exact science.
The important thing to remember is that your insurance covers your business. So your level of cover should be enough to fix the worst possible mistake your business can make.
You need to think about these things: what kind of work am I doing? What can go wrong? What sort of company am I working for? How much am I being paid? Is my work part of a larger project? What could I be sued for?
Your cover should be enough to fix worst-case scenario mistakes, pay compensation to your client AND stump up for the legal costs of defending you.
Buying as much as you can afford is a good place to start. You can never have too much.
Apart from the warm glow that comes with being insured, you mean?
If you're buying your insurance from us, the first thing you get is an email with links to your policy documents. This appears in your inbox a moment or two after you've bought your cover. (We don't post anything. Email is quicker, easier, cheaper, safer, and more reliable.)
Those documents are: a policy schedule, a policy wording, a summary of cover, a duty of disclosure, our terms of business, a statement of fact, an invoice and a selection of certificates depending on what insurance you buy.
If you pay by Direct Debit, your insurer posts a payment schedule too.
Some documents have our name on and some have your insurer's name on. Although it sounds like there's a lot to go through, it's really not that bad. At least you don't have to sign anything or send anything back.
Potential can of worms, this.
If you go out and about on business (for meetings, say), or if people come to yours, you'll need public liability insurance. It covers third-party claims of physical damage to property and people, made against you.
Staff need to be looked after. If you have employees, even just the one, you'll need employers' liability insurance. That way, you're covered if one (or more) of your guys alleges your business has injured them or made them ill, and claims damages. The HSE has made it a legal requirement so best not take any chances.
Office and property insurance covers the things you need to do your job. Everything can be covered, from pot plants to projectors; pencils to PCs. If you take things such as laptops, tablets, and other specialist electronics out and about, you'll need to cover them with separate portable equipment insurance.
Having business interruption insurance means you can keep working if your usual place of work isn't accessible. It covers the cost of temporarily setting up another place to work, as well as covering lost profits or revenue when you're out of action.
Last, but certainly not least, are your company's bosses. Directors and officers' insurance protects the people in charge from accusations that their decisions aren't in the business's, or the public's, best interests. They need it because directors' duties are many and varied, and allegations can come from anyone: shareholders, competitors, clients, regulators ... the list goes on. Directors being personally liable doesn't help either: if you don't have cover, you have to pay if something goes wrong. Gulp.
Second time lucky
Having failed miserably to convince you that directors’ and officers’ insurance is pointless, we’re going to try again. With professional indemnity insurance.
You might think you need it, but here are five solid reasons you don’t. And this time we’re serious. Just like the people in that picture there.