How much professional indemnity insurance do I need?

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.

What do I get with my indemnity insurance?

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.

What else do I need?

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.