Professional indemnity insurance

When should I get professional indemnity insurance?

The last thing you want is to start your business and fall at the first hurdle. So, it pays to have PI insurance in place as soon as you start working with clients.

That way, you’re covered for any mistakes from day one. Giving you peace of mind that you can grow your business without worrying that a claim is going to put a spanner in the works.

Remember, if you don’t have your professional indemnity insurance in place when a mistake happens, you won’t be covered.

That's because professional indemnity is 'claims made' insurance. That means for a claim to be covered, your policy has to be up and running both when a mistake is made, and when a claim comes in.

What’s the difference between professional indemnity and public liability insurance?

Professional indemnity and public liability insurance are similar in that they both cover claims of negligence against your business.

It’s the type of negligence where the differences lie.

Professional indemnity insurance protects you against claims made by clients unhappy with your work. This could be a failing to meet a contractual obligation, or not meeting the scope of work you agreed with your client.

On the other hand, public liability insurance covers your business against third-party claims for injuries or property damage said to be your fault. For example, someone tripping and falling at your premises, leading to a broken watch or an injured shoulder.

Read more about the differences between professional indemnity and public liability insurance.

Can I buy short-term professional indemnity insurance?

You can. But it’s a bit like playing Russian Roulette.

That’s because for a claim on your professional indemnity insurance to be valid, your policy needs to be up and running at two points:

1. When the work is done
2. When a claim comes in

So, if you buy a PI policy to cover a contract, then cancel it as soon as it finishes, you could be facing a problem. The reason being claims relating to your work can emerge weeks, months or even years later.

If that happens, and you’ve let your professional indemnity slide in the meantime, you won’t be covered. It’s far safer to get the protection an annual policy offers.

Read more about short-term professional indemnity insurance.

Do I need professional indemnity insurance if I work from home?

The short answer is: yes.

Regardless of where you work, you’re still doing work for your clients, which can lead to mistakes and claims.

If you’re an accountant, you can just as easily make an error on a balance sheet whether you’re at home or in the office. It’s not where you are that matters, but the mistake itself.

We know it can be confusing knowing what insurance you need when you’re running your business from home. Professional indemnity insurance should still be at the top of your list, though.

Is professional indemnity insurance a legal requirement?

It depends on the industry you work in.

For example, if you’re a chartered accountant, chances are your professional body requires that you have a minimum amount of professional indemnity insurance when you become a member.

The same is true for other occupations administered by professional bodies, like surveyors and barristers.

If you’re not sure, check your professional body’s website. They’ll have guidance that lets you know the minimum amount of cover you need. Some will also have lists of approved insurers, which you’ll have to get your insurance from if you want to meet their requirements.

Does professional indemnity insurance cover me for working with international clients?

Most UK insurers’ PI polices will cover you for working abroad.

There are a few key things you need to bear in mind before you start packing your bags, though.

There are two kinds of limits you need to consider when buying your professional indemnity insurance: geography and jurisdiction.

Geographical limits state where in the world you can work and still be covered.

Jurisdiction limits let you know what country’s laws your contracts need to be written under when you’re working with your clients.

If you don’t meet work within these limits, you won’t be covered when a claim comes calling.

If you’re intending on working abroad or with international clients, make sure you know these limits inside out when you’re buying your PI insurance. And that your insurance covers you for the kind of work you want to do.

Still got a few questions? Here’s everything you need to know about working abroad with professional indemnity insurance.

How much does professional indemnity insurance cost?

How much your PI policy costs depends on what you do and how much of it you do.

Some professions are ‘riskier’ than others. For example, the stakes can be high if an architect or engineer gets things wrong, and the numbers involved in a claim can be large.

When you get a professional indemnity insurance quote you’ll be able to select your occupation from among the hundreds we cover.

Also, a business that does, erm, a lot of business with a lot of clients is more likely to be sued than one that doesn’t - simply by the laws of probability.

Whatever the price though, professional indemnity insurance is worth its weight in gold in helping to protect any type of business from the potentially crippling financial repercussions of a claim.

Looking for an exact price? The best thing to do is to get a quote. It only takes a couple of minutes.