Professional Indemnity Insurance Explained

What Is Covered By Professional Indemnity Insurance?

Professional Indemnity Insurance (often referred to as professional liability insurance), pays any legal costs, as well as any compensation payments that you may incur if your client decides to take legal action against you for a mistake you have made when providing professional services, advice or designs. It also covers the loss of income from the time spent defending any allegation.

Professional Indemnity Insurance can cover a broad range of risks and mistakes including professional negligence, inadequate advice, services or designs, unintentional breaches of confidentiality or copyright, and loss of documents or data.

Example of a potential claim:

Architects were instructed to design a residential development compromising of ten properties. Dimensions for the site were provided by Surveyors but were incorrectly translated by Architects and the development encroached on to land owned by Local Authority. Additional costs were therefore incurred in purchasing additional land. The claim was settled at £10,000.

Do I Need Professional Indemnity Insurance?

There are many professions which require professional indemnity insurance as part of their respective industry body’s regulatory requirements. Although you may not be legally obliged to have Professional Indemnity Insurance, we strongly advise that you consider obtaining it as without it you may be liable to thousands of pounds worth of legal fees and compensation payments, not to mention lost income from the time spent defending any allegation.

Professional Indemnity Insurance offsets the risk of claims to your insurer meaning that your business doesn’t have to pay for costly legal defence costs nor find the money to meet any settlements or claims payments. Many businesses would simply not be able to meet the costs of an expert legal defence, not to mention the claims payment. Costs can run into the tens of thousands of pounds and more, so a policy to cover this makes perfect businesses sense.

Your business may require this type of insurance if:

  • It involves giving advice to clients
  • You provide a professional service
  • You handle information that is of confidential nature
  • You use material that is subject to copyright or intellectual property belonging to others
  • A client insists your business arranges cover before they offer you work (a contractual requirement to have the cover)

Many businesses insist that their business partners or suppliers have professional indemnity insurance so that they are not reliant upon the supplier having sufficient funds themselves to meet such claims.

Professions that may require professional indemnity insurance include (but are not limited to):

  • Accountants
  • Architects
  • Claims Management
  • Consulting Engineers
  • Design and Construction
  • Estate Agents and Letting Agents
  • Expert Witnesses
  • Environmental Consultants
  • IT/Computer Consultants and Website Design
  • Management Consultants
  • Photographers
  • Private Investigators
  • Recruitment Consultants

How Much Does It Cost For Professional Indemnity Insurance?

This depends on several factors:

  • The amount of cover you require
  • The size of your business
  • Whether you have had any claims
  • What profession you are in

We are able to offer PI cover for some professions below £100 inc IPT.

What Is The Difference Between Professional Indemnity and Public Liability Insurance?

Both public liability insurance and professional indemnity insurance are business insurance covers designed to cover compensation claims. However, the types of compensation claim they cover can be quite different.

Public liability insurance can cover your business for injury compensation claims made against you, property damage compensation claims made against you, legal fees associated with injury or damage compensation claims. Members of the public, which can include clients, customers and suppliers can make compensation claims covered by public liability insurance. Therefore, public liability is useful for most businesses (as most businesses come into contact with the public).

What Do We Offer?

We deal directly with the UK’s leading professional indemnity insurers to make sure that we offer the lowest premiums available but always backed up by our expert friendly advice. We’ve streamlined the quote process to make it as simple as possible so that you are able to compare quotes and buy online, or you can call us and we will compare quotes on your behalf.