Professional indemnity insurance (PI) is a type of cover that protects you against the costs of claims arising from your work. This includes the legal fees that you may need to pay if a claim is made against you.
PI can apply to almost any business that deals with clients in a professional capacity. This can include doctors, lawyers and accountants.
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Professional indemnity insurance is a business insurance policy that covers you against claims from third parties due to your negligence or breach of duty as a professional. It helps to protect your reputation and provides peace of mind for you as well.
Claims, no matter how innocent, can place a huge burden on your organisation’s finances. They can also lead to protracted litigation, which is costly and time-consuming.
PI cover is important for all professionals and businesses, as it ensures that you have the right amount of protection in place. There are a number of different types of professional indemnity cover, with some more relevant than others depending on the industry you work in.
Premiums for professional indemnity insurance vary according to your type of business, annual turnover and claims history. For example, a Financial Adviser will pay a higher rate than a Recruitment Consultant.
Cover
Professional indemnity insurance provides cover against claims of negligence or breach of duty arising out of the services you provide. You could be held liable for poor business advice, errors or omissions or defamation, which can result in costly legal action and compensation payments to clients.
Aside from being an essential financial protection for professionals, PI insurance also protects their reputation and the assets of their businesses should something go wrong. A reputable insurer will tailor a policy that offers the right amount of cover for your circumstances.
Many policies offer a ‘per-occurrence’ and ‘aggregate’ basis of cover. The per-occurrence limit is the maximum you can be sued for in a single claim, while the aggregate limit covers all claims made during the period of cover.
Who needs it
If you’re a professional in an industry that involves giving advice or services, it’s essential to have the right cover. This type of insurance will protect you in the event that a client files a claim against you.
This can happen when you’ve provided incorrect advice, failed to provide a service, or mishandled a client’s data. This can have a major impact on your business and your reputation.
Thankfully, professional indemnity insurance is designed to help you resolve these issues. It covers your legal fees and provides compensation for the loss of income and damage to a client’s reputation.
Many businesses choose to buy this insurance, especially those that give advice or handle client data and intellectual property. It’s also important for some professions, such as architects and chartered surveyors.
Construction
The construction industry is a lucrative one but it also presents risks. Whether you are designing and building a new home or helping a contractor complete a large construction project, if something goes wrong you could be sued.
This is where professional indemnity insurance comes in handy. It can help cover legal costs and compensation payments for any claims that arise due to your negligence.
Construction projects can be very complex and innovative. There are often a lot of different contractors working together and new methods being developed constantly, so it’s essential that you have the right type of cover to protect your business.
The problem is that professional indemnity insurance policies are becoming harder to obtain. Insurers are now putting restrictions in place, with higher premiums and excesses, that will have a serious impact on many companies and professionals in the industry. If you can’t get cover then you may find it very difficult to take on new projects.
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